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June 05, 2005

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Part of the reason I don't read Krugman that much anymore is that I know who he's going to attack, that he's going to pick and choose the data that supports his attack

My irony detector just exploded.

From Henke's "coup de grace"

Krugman:

"Thousands of reservists and National Guard members are no longer serving voluntarily: they have been kept in the military past their agreed terms of enlistment by "stop loss" orders."

Reality: The "Enlistment/Reenlistment Document" (pdf), in Section C [10] states that service obligations include war-time extensions. Reservists and Guard members voluntarily agreed to those terms.

Paul Krugman neglected to mention that fact.

This is a devastating refutation? That Guard members are happily "volunteering" for Iraq because of the fine print in their enlistment docs? Pathetic. Krugman's point obviously stands to any but the most bitter and vengeful partisan.

Oh, hi Charles.

"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."

Which of DeLong's measured assessments does Samwick prefer:

"Why are we ruled by these idiots and liars?"
or
"Impeach George Bush. Impeach Dick Cheney. Now."

Josh: My irony detector just exploded.

Mine too. I think Charles owes us both a replacement. ;-)

This is just proof that ObWi is balanced. Here, Charles is balancing Edward's post on Peggy Noonan.

Okey dokey: First, it's wrong to say that Krugman only responds to one charge. Okrent offered three after his column, in which he gave no specifics at all. Krugman responded to two here.

The onje he didn't respond to, according to Brad DeLong, was this:

"the example Krugman left out is an Okrent complaint that is not about numbers at all--Okrent's complaint Krugman called a study by Jagadeesh Gokhale and Kent Smetters a "Treasury Study" rather than a "study by Treasury Department economists." But the study was much more than a mere academic study by Treasury underling economists. It was a study commissioned by ex-Treasury Secretary Paul O'Neill and reviewed by then-OMB Director Mitch Daniels and ex-NEC head Larry Lindsey--but that's too long to get into a 700 word column"

A Treasury study vs. a study by Treasury economists commissioned by the Treasury Secretary -- I can't see why this is supposed to be a serious issue, especially since we're talking about a description used in the very tight format of an op-ed, and since nothing seems to turn on it, certainly not anything about Krugman's use of numbers.

The two objections that Krugman did respond to are:

(1) "Mr. Okrent’s claim that I engaged in "blending, without explanation, numbers from the household survey and the establishment survey -- apples and oranges -- apparently in order to make a more vivid political point about Bush (5/25/04).”

(2) "Mr. Okrent criticized me for “asserting that the 40 percent unemployed out of work for more than 15 weeks was a 20-year record" (2/10/04, 3/12/04) without acknowledging that the comparison only applies back to the redesign of the CPS questionnaire."

As to (1): Krugman says that he did not take numbers from the two sources. And he's right: I just went to the editorial at issue and looked at all the unemployment numbers. Then I followed Krugman's instructions, given in that editorial, for where to find the figures, took out my little calculator, and lo! all of them come from the same place, namely, the establishment survey. As far as I can tell, no number in that Op-ed comes from the Household Survey at all. Apparently, on this one Okrent was just wrong.

(2) There's a paper; Krugman apparently didn't know about it; it alleges that the redesign of a survey questionnaire makes comparisons between the pre-redesign data and the post-redesign data tricky. Krugman seems not to have known about this paper. If he didn't, he plainly did not selectively cite numbers for effect. On the substance, Brad DeLong says:

"Note: Polivka and Miller's numbers imply that the 1994 CPS survey redesign raised the reported average duration of unemployment by a week. Unemployment duration is reported at 19.6 weeks today. It averaged 15.4 weeks in the 1984-1993 decade before the survey redesign, and 14.2 weeks in the decade before that. It's not quantitatively important."

Okrent gives three other examples in his next letter; on these he is, as far as I can tell, just flatly wrong.

Most of the criticisms in the links Charles provides seem to me just wrong, but there are too many to go through. Samwick has a decent point about Krugman's use of the word 'only', though as far as I can tell the evidence supports Krugman's basic claim: that what's really driving decreases in unemployment is people dropping out of the labor force. This post from qando is worth thinking about, though I think that in the op-ed they cite, Krugman did make a good effort to present various comparisons so as not to cite numbers 'selectively', and that to have gone into the issues they take him to task for not going into would have been impossible within the limits of an op-ed. But most of the rest strike me the same way the dismissal of stop-loss orders struck 2shoes: puh-leeze.

One last thing about this: I suspect that part of what Okrent doesn't get about Krugman's response has to do with the fact that Krugman is an academic. Academics live and die by the accuracy of their data. Saying that an academic "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" is, for us, an incredibly serious accusation, in a way that Okrent might not get. Likewise, most of us are fine with being challenged, but we tend to assume that the people doing the challenging will have made some minimal effort to understand the issues involved. (I, for instance, respond well, I hope, to being flayed alive by other philosophers when I give talks, but I get somewhat testy when I get one too many email solicitations from freshmen I have never met, and who are not from Hopkins or anywhere I have ever been associated with, asking me to briefly outline bioethics to help them write their papers.)

Okrent did not meet the basic standards that separate reasonable from unreasonable criticism. He didn't check his sources; he didn't find out basic facts; he seems to have thought: well, if Luskin (or whoever) tells me this is a problem, I should just challenge Paul Krugman on it, without so much as trying to see whether there's anything to the criticism. -- Academics take discussions of their disciplines seriously. This is why the accusation of bad faith is, for us, extremely serious; but also why we tend to assume that someone who does not so much as try to verify his or her claims is not seriously engaged in it.

Forget the irony meter, this is just another BD ad hominem post -- in this case, we get links to a bunch of poorly written arguments about Krugman, ending with this conclusion:

In any case, you don't have to read that many columns to know the agenda of this bitter and vengeful man.

Seems almost self-reflective.

Barry's Iron Law of Right-Wing Freudian Projection: right-wingers are incapable of accusing others of doing something, unless they did it 10x as much already, or intend to do it 10x as much as soon as they can.

I used to call it a principle, then I elevated it to a law, as more data came in. Now, after vast amounts of confirmation, it's an 'Iron' law.

dmbeaster: Forget the irony meter, this is just another BD ad hominem post

Well, yeah. But for BD to accuse someone (anyone) of "fitting his data to his politics" - Irony meter snaps like a nylon rope on Pluto.

It's true, Barry. It's not like other parts of the political map are immune to it, but it's most common and most virulent right now on the right. The preacher who most vigorously condemns gays is doing tricks. The businessman who most rants about evil government involvement in industry is getting big contracts and big kickbacks. The politician who accuses others of not caring about the world's needs is supporting tyranny, torture, and those responsible for other misreies. The critic of petty corruption is the recipient of kickbacks from much larger and more damaging corruption. And so it goes.

There are genuinely honorable exceptions to this, but it's a sound assumption.

The one two punch of a 'why do all the liberals not let any conservatives present their arguments and jump all over them' post followed by a post designed to wave a red flag in front of every liberal on the list. And I thought the first post was honestly trying to address some sort of perceived lacunae here.

You know, there are kids like that in every elementary school class who engage in all sorts of anti-social behavior and then complain that they are being ostracized, but here it seems like a calibrated effort. I mean, Brad DeLong has gone medieval on the admin so many times, Samwick's notion that Krugman is out in left field is truly bizarre and is probably premissed by the realization that citing Luskin for support is really going to show your true colors.

If you really want to make this place more welcoming to conservatives (and you are far away from even starting that effort AFAICS), pretend that you are open to persuasion. Stop attacking messengers and deal with messages. Who knows, in time it might actually reflect your view...

You can't teach and old BirdDog new tricks.

Just because BirdDog was a moronic troll on Kos, an incessant blatherer on Tacitus who got elevated to front pager because Josh Trevino was too busy sucking up to Krempasky, Viguerie and Blackwell to tend to his own house, and now a front page contributor to ObsidianWings...makes him, Charles Bird(Dog), no less an obnoxious, factless, feckless, truthless, moronic troll now.

Except now the troll gets frontpage space.

And we wonder why the "liberal" media is such a cesspit?

I think that any frontpager on any blog of any merit, or any blog seeking merit and acclaim, who so commonly and blatantly lies, distorts, cherry-picks, and then lies again...well, let's put it this way: there is a reason for this:

Hate to be harsh to the many here who do great things...but get your shit together.

RedDan, someone more authoritative will probably soon come along to say this after me, but I suspect that your comment might violate this site's posting rules. There must be a more constructive way of disagreeing with this post or pointing out the problem you're looking to discuss.

RedDan: your comment does, in fact, violate the posting rules. (Specifically, the ban on incivility.) Argue all you want, but don't do personal abuse.

For those of us who used to frequent Tacitus, this kind of venom is nothing new from RedDan. I don't disagree with him substantively on this post, but he obviously hasn't learned anything about presentation from his various bannings.

Jack,

You're probably right.

In many ways, I do care about the posting rules, and feel bad that I have probably violated them twice in the past 30 minutes.

However, in some cases, in some instances, in some contexts, I feel that it is entirely appropriate to throw rules in the trash can and follow one's heart.

Having been banned from places like Tacitus and RedState for entirely dishonest, innappropriately and unevenly applied, apparently subjective "posting rules" that were twisted to fit the desires of the proprietors, and having seen the proprietors, and BirdDog, violate the same rules of conduct on other sites (Gilliard, Billmon (when he had comments), Kos, and others), I am entirely unsympathetic to the whines of outraged liars who invoke the rules only as means to "win" arguments.

I hate self-hamstringing in the cause of moderation. I despise self-gagging in the cause of "hearing all sides" because in some cases one side is lying.

It has been amply demonstrated, in this particular instance (DeLong, Somerby, Uggabugga, and others) that Okrent's attack was lame, cheap, unwarranted, and unsubstantiated, and that Krugman's response was devastating...Bird's laundry list of cheerleading righty liars does nothing to change that.

I have no qualms calling a liar out, nor do I have any qualms risking a banning to say so.

If the powers that be see fit to block me for saying so, so be it.

Catsy,

For those of us who used to frequent Tacitus, this kind of venom is nothing new from RedDan. I don't disagree with him substantively on this post, but he obviously hasn't learned anything about presentation from his various bannings.

So I am right, but you object to my tone.

Fine.

However, we are not arguing (actually agreeing, in this case) about an academic point, about the difference between a .5 vs 1.0 percent increase in wages and the effects on local economies, about the difference between various interpretations of historical texts.

In this case we are arguing (actually agreeing) about wilful, conscious, deliberate misrepresentation of blatantly obvious, recorded, factual statements.

We are arguing (actually agreeing) about an ongoing pattern of widespread, orchestrated, vocal hitjobs and smears perpetrated in the service of a particular, destructive, mendacious political agenda that has cost the lives and livelihoods of hundreds of thousands of people in America and around the globe.

Where's those WMD's?

What happened in Abu Ghraib and Gitmo and Bagram?

Was Newsweek right or wrong?

Does the Army have enough recruits, armor, and intel to do their jobs?

Is the military being used as intended by the founders, and in the service of the defence of the US citizen from imminent threats?

On each and every one of the above questions, there are certainly arguments to be made on many sides...and then there are the blatant, conscious, deliberate lies.

The multitude, the sheer volume of verbiage spilled in the cause of showing those lies, documenting that mendacity is staggering.

As Billmon has pointed out, there have been at least 10 "Deep Throats" in the last two years, and thousands of column inches devoted to exposing the nature, cause, and effects of those lies...

And yet we still mute ourselves in the cause of "moderation"????

It drives me nuts.

So, as I said, y'all may choose to ban me...fine.

But that will not change the reality, nor will it change the fact that as long as those lies go unanswered and unchallenged as lies, explicitly and vocally...they will hold the field and all will suffer.

So I am right, but you object to my tone.

Seconded. One might stop to consider that one could argue that the cumulative effect of the posting rules has been to drive out conservative commentators, which could be partially taken to speak to their rhetorical tendencies. I realize it is not as spectacular as screaming at the top of one's lungs, but it does achieve the same effect, though in a much slower manner.

lj, "the slow way is the best way." (Arrgh, quoting Dune, I'm embarrassed.)

An old friend and colleague once said to me, "it never hurts to be polite." This was in the context of sending a nasty, lawyerly letter to a crook.

ral,

Maybe so, but only if being polite does not get in the way of the truth.

RedDan, I quite agree. I take Katherine as my model.

RedDan: since you're new here, you might not know that I am one of the liberals on the site. I am not invoking the rules to win an argument; I am not (as far as I know) in an argument with you on any point of substance, and if I were, we'd probably agree on a lot of things. That's not relevant to the question whether you have to follow the posting rules, though. If you want to challenge Bird Dog's facts, be my guest, but follow the rules if you want to keep posting here.

If you want to challenge Bird Dog's facts, be my guest, but follow the rules if you want to keep posting here.

Somewhat beside the point, since he mouthed off and got banned, but your statement rather begs the question of Bird Dog having facts in his post. ;)

Hilzoy,

I understand your point and the rules you have here. But I have to agree with the substance, if not the delivery, of Red Dan's message.

How long did it take you to tear apart Okrent's arguments and find that he simply doesn't understand what he is talking about (on the BLS studies, for example). How did Charles miss that?

The reality is that Charles consistently and constantly writes, well, garbage. He writes long and detailed posts which never seem to address any of the well known counterarguments and when confronted with them he simply denies them. He has been doing this for a long time, and its an MO with him. He is quite gifted at writing a lot without really saying anything or addressing the relevant points.

I've seen this on all kinds of topics. On some that I am very familiar with (Latin America and Chavez come to mind) I have repeatedly pointed out basic errors he made (like calling Chavez, a man who has won every election he ran in by huge margins, a dictator like Castro). He simply ignores them.

There are many very good and honest conservatives (Sebastian being one of them) that I have to wonder what Charles is doing in this site.

Just my 2 cents.

but your statement rather begs the question of Bird Dog having facts in his post

Or caring. The post was made. Mission accomplished. Operation "Destroy Paul Krugman", one of many currently underway, proceeds.

But...Vive la politesse

GT: it's the delivery that was at issue. You, for instance, made your point perfectly civilly; I'm not clear why Red Dan couldn't have done the same.

Why Charles didn't address those issues, I have no idea, not being him.

Why Charles didn't address those issues, I have no idea, not being him.

I'd like to see you address GT's point ( "I have to wonder what Charles is doing in this site" ). Specifically, why do you feature, on this site, uninformed and factually incorrect partisan screeds written by someone who claims his audience is conservatives when doing so seems, to me at least, to be at cross-purposes with what you have stated to be the aims of this site?

It doesn't make sense. Explanation? If I am off the mark here, could you please explain to me how featuring material such as this furthers the aims of the site, as you have previously stated them?

Thanks.

I suspect that part of what Okrent doesn't get about Krugman's response has to do with the fact that Krugman is an academic. Academics live and die by the accuracy of their data.

The problem, hilzoy, is that Krugman's rhetoric is mostly black and white, while the economic data for which he plies his trade is various shades of gray. Okrent's statement that Krugman leaves himself open to substantive assault is a true statement. It took me all of four minutes to find the eight non-Luskin links in my post. Whether you consider them substantive or not is a matter of opinion, as is the contention that he does or does not slice and dice and julienne and curlicue the data. Others like DeLong have criticized Okrent for him not making the case on slicing and dicing. Fair enough. In my view, without even getting into Okrent, there was Henke, Franks, Maguire, Glass, Worstall and Samwick who provided multiple examples of Krugman's approach to using data and making claims therefrom. The other issue is that Krugman has shown himself to be even more partisan than the likes of Carville and Begala. After all, even they have at least one column that could be considered a "crossover". Over 500 consecutive columns and not one takes liberals or the Democratic Party to task? How can there not be a bending of the data with this sort of record?

In my view, without even getting into Okrent, there was Henke, Franks, Maguire, Glass, Worstall and Samwick who provided multiple examples of Krugman's approach to using data and making claims therefrom

Except where noted by hilzoy further up, these were all, and I mean all, miserable failures in that regard and by citing them (tellingly without actually citing text from said "coup de graces") you have eroded your already tenuous credibility.

Your quest for "balance" is simply a plea to ignore uncomfortable "facts".

"The other issue is that Krugman has shown himself to be even more partisan than the likes of Carville and Begala. After all, even they have at least one column that could be considered a "crossover". Over 500 consecutive columns and not one takes liberals or the Democratic Party to task? How can there not be a bending of the data with this sort of record?"

Posted by: Charles Bird

Charles, you're pulling the 'plague on both your houses' gambit. The Bush administration doesn't deserve one column of praise.

"The other issue is that Krugman has shown himself to be even more partisan than the likes of Carville and Begala. After all, even they have at least one column that could be considered a "crossover". Over 500 consecutive columns and not one takes liberals or the Democratic Party to task? How can there not be a bending of the data with this sort of record?"

That would certainly be a compelling argument - if it were true.


Okrent's problem with Krugman is that Krugman cites data, which complicated Okrent's job.

Okrent would have had no problem if Krugman had based his columns on deep truths he'd learned by dining with the family of a single deployed Guardsman at an Applebees in Clarion, Pennsylvania. Then, anything would be okay.

Or if Krugman wrote columns around alleged conversations with a mystical cab driver in Mumbai, as Tom Friedman does.

But no... Krugman had to go and use facts. Facts that could be checked.

Okrent is much happier if columnists use things that are not checkable. It makes his job much easier.

Glad to know you're a fan of DeLong's, Charles. I think he does a terrific job.

Meanwhile, the utter absurdity of these complaints - the one 2shoes mentions, the one about the "Treasury study," the one about retirement income, the one about Internet taxes - tells us that the critics are simply trying to find every misplaced comma, every rounded number, to try to refute Krugman.

Meanwhile, they no doubt continue to read NRO, and consider Kudlow and Luskin and Bowyer the true economic sages of our time. Pathetic.

the one about Internet taxes

That critique looked pretty damn accurate to me and seemed a pretty embarrassing gaffe. Did I miss something?

FWIW, I tend to agree with Brad DeLong's assessment as cited upthread by matttbastard:

Mr Krugman wages, and always has waged, intellectual thermonuclear war against all whom he regards as denizens of the pit and carriers of error. He's usually right (80% of the time?); he's sometimes wrong. The interesting question--which you did not pose--is what has the Bush administration done over the past three years to draw such a concentration of Mr Krugman's intellectual fire?

That's a decent question, Anarch. Got any ideas?

That's a decent question, Anarch. Got any ideas?

"I got a lot of ideas. Trouble is, most of them suck." - George Carlin

I'm with George. Which is why I hardly ever post.

On the bright side, the most-of-them-suck pattern recognition algorithm works at least half of the time.

That critique looked pretty damn accurate to me and seemed a pretty embarrassing gaffe. Did I miss something?

If I'm remembering the details correctly (and I easily might not be -- while IAAL, IANATaxL), he was talking about a tax that would have taxed out-of-state Internet transactions. These taxes are now formally subject to sales tax but in practice the sales taxes are uncollectible and uncollected. While it's true that the tax in question wasn't a sales tax, it was a tax intended to capture the revenues that the current sales taxes should collect but don't. At that point, your 'embarassing gaffe' is my 'literally incorrect but non-deceptive shorthand'.

Anarch & Slarti,

...what has the Bush administration done over the past three years to draw such a concentration of Mr Krugman's intellectual fire?

That's a decent question, Anarch. Got any ideas?

I think it goes back a bit farther than three years (from November, 2003). Paul Krugman himself gave the answer -- he was spurred into action by the Bush campiagn's "2 - 1 = 4" story on Social Security during the 2000 campaign.

Just looked up the column. My memory was flawed, and Krugman was more scrupulously accurate than I had recalled. He was talking about the Internet Tax Freedom Act, that prohibits any tax specifically on internet transactions that would allow states to capture the sales taxes they lose to all the out of state retail commerce that showed up with the Internet, and points out that there's no good economic reason that in-state commerce should be subject to sales tax while out-of-state commerce isn't. I can't find an error in the column.

Now, IANATaxL. Maybe there is an error in the column -- I'd appreciate it if someone who thinks there is could quote the offending text, and explain to me why it's wrong.

Maybe there is an error in the column -- I'd appreciate it if someone who thinks there is could quote the offending text, and explain to me why it's wrong.

But...but...that would be responsible and ethical.

Maybe there is an error in the column -- I'd appreciate it if someone who thinks there is could quote the offending text, and explain to me why it's wrong.

I exist only To Serve Man.

But Krugman didn't characterize any tax as a sales tax that wasn't a sales tax. He accurately said that Internet transactions are in practice not subject to sales tax (that is, formally they are subject either to sales or to use taxes, but use taxes are uncollectable as your link notes). The ITFA blocks states from rewriting their tax laws to collect taxes on those transactions -- I looked at the language of the act, and this seems perfectly clear.

I don't mean to be a twerp about this, but can you quote the parts of the column that you think are erroneous? Your link is pretty non-specific.

beware the messenger (or anyone who cites Luskin favorably)

The interesting question...is what has the Bush administration done over the past three years to draw such a concentration of Mr Krugman's intellectual fire?

The best way to answer this is to go to the archive, as LizardBreath did. Look for the transition from the (relatively) relaxed Krugman of old, having fun with Voodoo economics and much else, to the fiercer Krugman of today. To me it seems that two things got to him: (1) the dishonest use of numbers, especially in connection with SS and (2) the fact that full-time journalists were not drawing attention to the dishonesty. The rise in temperature happens in mid-2001.

But do go and look for yourself.

LB & Slarti: I've actually read all those columns and a few more besides. At the moment I'm leaning towards the position that the DCPA et al. know what they're talking about re internet taxes. That's what I was asking for (again, not much with the specifics today, I'm not): a critique of the DCPA's counterposition.

The problem with the criticism of the Internet tax issue is that while the column may fit Lizardbreath's "literally incorrect but non-deceptive shorthand," that really is about all that's wrong with it.

The thrust of Krugman's point is that there is no good reason to give Internet commerce tax privileges relative to normal retail commerce. Now, technically, under the current structure of sales and use taxes, you can argue that it doesn't have any, but that's purely technical, since use taxes tend to go unpaid anyway. So as a practical matter, in order to put Internet commerce on a level footing with local stores you have to find some other way to tax these transactions, and that's what the Act prohibits.

I think the very first part of the bill makes it perfectly clear that it's not there to obstruct normal collection of taxes, and that it's there to prevent new taxes (especially on access) from being levied. States would then be completely free to enforce existing tax codes, would they not? They just have to figure out how.

In fact, the bill explicitly says it's not to "...modify, impair, or supersede, or authorize the modification, impairment, or superseding of, any State or local law pertaining to taxation...".

And of course, each state could assess taxes at the point of sale, could it not? That'd neatly take care of the problem, only to cause a new one to pop up.

How Paul Krugman became shrill

I knew I had read about this -- BuzzFlash Interviews Paul Krugman, Sep. 11, 2003

Or,

Paul Krugman is a mild-mannered university economist. He is also a New York Times columnist and President Bush's most scathing critic. Hence the death threats. He talks to Oliver Burkeman.

Guardian Unlimited, Sep. 19, 2003

"It's an accident," Krugman concedes, addressing the question of how it came to be that the Bush administration's most persuasively scathing domestic critic isn't a loudmouthed lefty radical in the manner of Michael Moore, but a mild-mannered, not-very-leftwing, university economist, tipped among colleagues as a future Nobel prizewinner. "The Times hired me because it was the height of the internet bubble; they thought business was what would be really interesting. Turned out the world was different from what we imagined... for the past two-and-a-half years, I've watched what began as dismay and disbelief gradually turn into foreboding. Every time you think, well, yes, but they wouldn't do that - well, then they do."

I think it's important to also factor in the atmosphere at the time that McCain made his proposal, which, iirc, corresponded with a wave of proposals to regulate the internet in terms of not only taxes but also content and so could be viewed as a counter reaction to that. This is not to excuse any errors that Krugman may have made (I'm not sure if he did, I believe that the 700 word column is the Platonic vehicle for creating the possibility of error ab ovo) but if we don't factor in the atmosphere, we really miss what is driving the dynamic.

Ironically, it seems to provide an example of Krugman being more scrupulously principled than his critics, in that he is arguing (I think) that the Internet is just like anything else and if you seriously believe in the principals of economic incentives, you can't simply remove them from consideration.

And of course, each state could assess taxes at the point of sale, could it not?

From reading the ITFA, I think it's pretty clear that this is prohibited.

(iii) imposes an obligation to collect or pay the tax on a different person or entity than in the case of transactions involving similar property, goods, services, or information accomplished through other means;

The states can't constitutionally (AFAIK) tax the sales receipts of out-of-state vendors. What they can do, constitutionally, is tax the out-of-state expenditures of state residents. This is impractical as a matter of fact, because you can't collect a tax like that from consumers. What the quoted language does, if I'm reading it correctly, is bar the states from imposing a requirement on out-of-state vendors of collecting the use taxes for the states-of-residence of their buyers. I don't see another way to capture revenues equivalent to a sales tax on out-of-state internet transactions -- effectively, it makes it practically impossible to tax them. (The stated intent of the law is pretty much irrelevant -- statutes do what their language does, not what their sponsors intend.)

Slarti: my sense is that Krugman was really surprised by the fact that this administration was just lying, and not about minor details (about which one might say: well, this is a political speech, we can't do all the details right), or about minor politically objectionable bits, but about the entire point of what they're doing. I think that for a lot of the people one regularly sees e.g. on Sunday talk shows, politics is in some sense a game, and they're more comfortable making horse-race points, or saying who scored some point or other, than addressing substance. Also, of course, they are not expert in the substantive issues involved.

Krugman, of course, really is an expert. Like him or not, he's a very, very good economist. But he's also from outside the usual world of columnists, and so is (I've always thought) less interested in who scored a rhetorical point and more likely to have such thoughts as: but they're lying! And, as a really good economist, he's quite capable of seeing when that's the case: someone not trained in econ might be inclined to (for instance) take Luskin's economic arguments seriously, since (s/he might think) for all I know, they could be right; but someone who knows the field absolutely would not.

Also, I think (again) that it's worth bearing in mind that he's an academic. Like us or not, we do tend to assume that getting at the truth matters, and that one of the main points of engaging in discourse is to try to get at it. An academic confronted with the systematic misuse of arguments from his or her field for political purposes would, I think, be more likely than other people to get mad, since we take those fields seriously. (It's like the reasons I've always thought that if I were still religious, I'd probably be furious about the political use of religion: it wouldn't be any old thing that was being misused, but one of the most important things there are.) We also tend to be annoyed by people in our disciplines who have no apparent interest in the truth, and to wonder why they have so little respect either for the discipline or for their own intellects.

I can recall a few times when I've thought Krugman got something wrong, but I think (and I don't think I'm being partisan here) that on balance he has been right more than most other commentators. I also think that what the Bush administration has done to make him mad -- which is, basically, to lie about the most basic aspects of what they are doing -- is something that ought to make anyone mad, regardless of party; and the wonder is that Krugman's reaction isn't more widespread. I also think that he is not, in fact, way to the left. The level of indignation isn't a function of his distance from the center; it's a function of how seriously he takes things like basic honesty, which isn't a partisan question.

felixrayman wrote:

I'd like to see you address GT's point ("I have to wonder what Charles is doing in this site" ). Specifically, why do you feature, on this site, uninformed and factually incorrect partisan screeds written by someone who claims his audience is conservatives when doing so seems, to me at least, to be at cross-purposes with what you have stated to be the aims of this site?

It doesn't make sense. Explanation? If I am off the mark here, could you please explain to me how featuring material such as this furthers the aims of the site, as you have previously stated them?

I'd like an answer to that question too. To me Charles is like a .150 hitter on a good baseball team, a team with a collective batting average of about .325. Why does the manager keep putting the .150 hitter in the lineup, especially when all available evidence shows he's never hit more than .150 his entire career? Does the manager think that eventually he can get that batting average up to .165?

Aside from the posting rules issue, I'd say that his posts tend to spark good comment threads -- in my view because they tend to be dreadfully misguided, but the discussion's good in any case.

I also think that he is not, in fact, way to the left.

This is important. Read some of his popular stuff pre-2000, like The Accidental Theorist and you find sharp criticism of liberal as well as conservative views on many issues. He was happy to skewer idiocy wherever he found it. I suspect the only thing that has changed is that he found the Comstock Lode in the Bush Administration.

Or 'Peddling Prosperity', which I didn't want to mention, because I don't want to bow down to the 'you must criticize both sides, and make them look similar'.

hilzoy, another reason is that this stuff matters. We're still paying off the Reagan deficit; we'll be paying off the Bush II binge for the rest of our lives. If we're lucky, we'll pay it off as in our taxes; if we're not, we'll "pay it off" like the citizens of many other countries have, through depression, devaluation, inflation, and really hard times. During which, of course, the same people who cheered for Bush will blame it on 'Bush-haters', who presumably hate America.

Bush & Co., of course, figure that they can do as they will for a long time, because America is a strong country - meaning that they can suck the life out of it for a longer time.

Barry- I'd like to think people will wake up and realize that it was the Bush administration policies that are responsible for grievous damage to the American way of life, but I fear you may be right.

"bitter and vengeful"?

for god's sake, Charles, please spare us your olympian disdain. the democratic party may not be staffed by angels, but at least they're not spending money like the end of the world is coming. I'd like to see you write anything remotely as interesting and as accurate with the same constraints as PK faces.

And before we all bless BdL as the thinking liberal's PK, let's remember that he excoriates the administration far more vigorously than PK ever does. Remember his citations, with approval, of the TNH's comment "I deeply resent the way this administration makes me feel like a nutbar conspiracy theorist."

reading CB disdain the reporting of Amnesty Intl and PK reminds me of the fable of the frog and the bull. Best of luck, Charles, on puffing yourself up that big.


And before we all bless BdL as the thinking liberal's PK, let's remember that he excoriates the administration far more vigorously than PK ever does.

Huh? That's part of the reason I like him.

The states can't constitutionally (AFAIK) tax the sales receipts of out-of-state vendors.

Well, that would have been a silly suggestion, had I made it. No, I'm talking about taxation at point of sale by the state that has the power to levy the tax, which is, as far as I can tell, completely in the power of those states, and explicitly not proscribed by the bill.

Consider the parallel in meatspace: A resident of northern Alabama can drive into Tennessee and make a purchase. Which state sales tax rate does our mythical Alabamian pay? Does Alabama have any recourse for recovering its "lost" tax revenues?

"Which state sales tax rate does our mythical Alabamian pay?"

Tennessee's. The act of the sale in Tennessee is what is taxed.

"Does Alabama have any recourse for recovering its "lost" tax revenues?"

Yes, it can try to collect use tax on it (if such a tax is imposed by Alabama). The problem is finding out what in-state residents purchased out of state. Easy if the item needs to be registered by the state, such as a car. Much harder in all other circumstances, although I recall an article several years ago where Pennsylvania state police were noting license plates of Pennsylvania residents who shopped at Delaware electronics stores (Delaware has no sales tax) who left carrying computers, big screen TV's, etc.

Krugman, of course, really is an expert. Like him or not, he's a very, very good economist.

You know, I'd never dispute this. I think Krugman's chief shortcoming is inadequate editing. If word-limitation precludes accuracy, he should have no trouble finding something else to do.

No, Krugman's chief shortcoming is telling uncomfortable truths. I notice that his critics have far fewer problems with the other NYT columnists, or with the WSJ editorial page.

I notice that his critics have far fewer problems with the other NYT columnists, or with the WSJ editorial page.

You haven't been paying attention; NYT columnist-bashing is a sport coming into its own. I would say, though, that Krugman gets extra attention because of his background and education.

Oh, that's it? They look at his MIT/Stanford/Princeton pedigree, and are drawn to it? They have a thing about economists?

Or perhaps, just perhaps, they hate him for having the training and the balls to say what they don't want to have said?

Was there a request for information in there, somewhere, or is this a solo act?

Consider the parallel in meatspace: A resident of northern Alabama can drive into Tennessee and make a purchase. Which state sales tax rate does our mythical Alabamian pay? Does Alabama have any recourse for recovering its "lost" tax revenues?

IAStillNATaxL, but I don't believe a vendor, under current law, may impose sales tax on an item to be delivered out of state -- isn't that the whole point of use taxes? This is an impression, not a certainty. If I'm right about that (and if I'm wrong, then why aren't the states collecting tax on Internet transactions now?) it looks to me as if the IFTA would, through the language I quoted, bar changes in the law to impose taxes as you suggest.

I'll google around some, and see if I can support what I just said.

LB,

I think the internet situation (which is itself based on earlier catalog situations) is different than what slarti was asking. He was asking what happens if the person travels to another state and purchases an item there. Since the cashier where you are purchasing doesn't know that you are not a resident of the state (and I am pretty sure it does not make a difference anyway), you are charged the sales tax of the state you are buying the product in, even though you may also be charged a use tax when you return to your home and bring the item with you.

it looks to me as if the IFTA would, through the language I quoted, bar changes in the law to impose taxes as you suggest.

Well, that's debatable. On the one hand, we have:

SEC. 101. MORATORIUM.

(a) MORATORIUM- No State or political subdivision thereof shall impose any of the following taxes during the period beginning on October 1, 1998, and ending 3 years after the date of the enactment of this Act--

(1) taxes on Internet access, unless such tax was generally imposed and actually enforced prior to October 1, 1998; and

(2) multiple or discriminatory taxes on electronic commerce.

(b) PRESERVATION OF STATE AND LOCAL TAXING AUTHORITY- Except as provided in this section, nothing in this Act shall be construed to modify, impair, or supersede, or authorize the modification, impairment, or superseding of, any State or local law pertaining to taxation that is otherwise permissible by or under the Constitution of the United States or other Federal law and in effect on the date of enactment of this Act.

On the other hand, though, we have this:

SEC. 101. MORATORIUM.

(a) MORATORIUM- No State or political subdivision thereof shall impose any of the following taxes during the period beginning on October 1, 1998, and ending 3 years after the date of the enactment of this Act--

(1) taxes on Internet access, unless such tax was generally imposed and actually enforced prior to October 1, 1998; and

(2) multiple or discriminatory taxes on electronic commerce.

(b) PRESERVATION OF STATE AND LOCAL TAXING AUTHORITY- Except as provided in this section, nothing in this Act shall be construed to modify, impair, or supersede, or authorize the modification, impairment, or superseding of, any State or local law pertaining to taxation that is otherwise permissible by or under the Constitution of the United States or other Federal law and in effect on the date of enactment of this Act.

Maybe there is some wiggle room there, after all.

slarti,

No. the language in Section 101(a)1 deals with taxes on internet access (i.e., imposing a per e-mail tax). Section 101(b) is what deals with the sales and use tax issues.

"Was there a request for information in there, somewhere, or is this a solo act?"

Posted by: Slartibartfast

Please google 'Rhetorical Question'.

Ah. So sales tax on Internet purchases is, in fact, allowed.

Oh, and JFTR, I've never been charged a use tax per se, although I've bought a lot of things out of state. I have no idea if that means anything relevant, other than that I'm ignorant on use tax.

Lastly, if it's not absolutely clear that I am neither a businessman nor a tax accountant...IANAB, and IANATA.

Oh, I did get that -- the answer to his question is that you pay the tax of the state you're standing in at the moment of purchase. I've been googling around, and my somewhat clearer impression of the way this all works legally is now that:

(a) The location of a purchase is the state in which the purchaser is standing when she makes the order and receives the product.

(b) Pre-ITFA federal law bars states from imposing sales taxes on purchases located in other states (i.e., catalog, internet purchases) No one worried about this much until the Internet, because it just wasn't enough volume -- use taxes were a gesture toward taxing those sales equitably, but have never been really collected from consumers.

(c) Constitutionally, a state may not require a vendor to collect use taxes for it unless the vendor has a nexus with the state -- roughly unless it does business within the state.

What ITFA does, then, leave the situation like this: under prior federal law, the vendor's state can't charge sales taxes of goods shipped to an out-of-state purchaser, so sales tax is out; under the Constitution, the purchaser's state can't make the vendor collect use taxes for it unless the vendor has a nexus with that state, and ITFA prohibits the purchaser's state from statutorily defining an Internet presence as a sufficient nexus for this purpose, so charging use tax is out; and either state's imposition of a new tax that would be called something different than sales or use tax but would operate only on transactions with respect to which sales or use tax wasn't collected is out as a discriminatory tax on Internet transactions.

IFTA really does appear to block the taxation of these transactions.

slarti,

"Oh, and JFTR, I've never been charged a use tax per se, although I've bought a lot of things out of state."

Nor I, although Pennsylvania's silly laws on alcoholic beverages, and the proximity of Delaware ("home of Tax-Free Shopping" as it says on the signs welcoming you to the state) makes it very common for me. That's what made the article about the PA State Police hanging around the Best Buy lots I mentioned above so surprising, as if they were going to seriously try to enforce use tax laws.

"I have no idea if that means anything relevant, other than that I'm ignorant on use tax."

Join roughly 99% of the general public.

Ah. So sales tax on Internet purchases is, in fact, allowed.

Only for sales within the vendor's state. Otherwise, I believe it's prohibited by prior federal law, as above.

Oh, and JFTR, I've never been charged a use tax per se, although I've bought a lot of things out of state.

Well, you owe it, you just haven't paid it. (Don't feel bad, neither does anyone else, barring businesses who buy enough out of state that they can be tracked.) You're supposed to be sending an amount equal to the sales tax you would have paid if you'd spent the money in-state off to your state taxing authority. It's uncollected, because it's impossible (for the reasons detailed above) to make the vendor do the work of collecting it, and it's impossibly cumbersome to spy on you closely enough to figure that you bought $50 worth of stuff on Amazon and therefore owe the state $4.

Oh, I did get that -- the answer to his question is that you pay the tax of the state you're standing in at the moment of purchase.

Really? What if you send a check? How does the guy you're sending a check to collect state sales tax for YOUR state?

Pre-ITFA federal law bars states from imposing sales taxes on purchases located in other states (i.e., catalog, internet purchases) No one worried about this much until the Internet, because it just wasn't enough volume -- use taxes were a gesture toward taxing those sales equitably, but have never been really collected from consumers.

I dunno, I used to mail-order just about as much stuff relative to my income level pre-Internet. Guess more data than anecdote is needed, though. Larger point, though: it's pre-ITFA tax law that's broken, not ITFA.

IFTA is just preventing it from being fixed. (And I can look for data if you like, but do you really think that Internet commerce hasn't vastly expanded the amount of out-of-state purchasing people do?)

On-topic point -- Krugman was right about this, at least in the 'didn't screw up his facts' sense, rather than necessarily in the 'you must agree with the point he was making' sense. These transactions are un(sales)taxed, and IFTA is getting in the way of taxing them. Doesn't this one have to come off the list of Krugman errors?

That's the way all of the Krugman nitpicking seems to go. It's not that he's infailable or inerrant, no one is, but the errors that get put on these big lists that demonstrate what an awful columnist he is seem to be either ridiculously trivial, or not actually errors.

slarti,

"Oh, I did get that -- the answer to his question is that you pay the tax of the state you're standing in at the moment of purchase.
Really? What if you send a check? How does the guy you're sending a check to collect state sales tax for YOUR state?"

He doesn't -- he collects the sales tax for his own state.

Also, if you are standing at the cashier's station, how are you sending a check?

Ah, we're back to Krugman. Says Krugman:

But there is also a legal impediment: the Internet Tax Freedom Act of 1998, of which John McCain was a chief sponsor, imposed a three-year moratorium on Internet taxes.

Which is, of course (read the whole thing), incorrectly conflating Internet tax and sales tax. Sales tax is still collectable for Internet purchases to the exact extent that it was before the law went into effect, unless I'm completely misreading the bill. Krugman's pointing to this bill as if it's some new, tricky exemption from sales tax, which of course it isn't.

slarti,

"Sales tax is still collectable for Internet purchases to the exact extent that it was before the law went into effect, unless I'm completely misreading the bill. Krugman's pointing to this bill as if it's some new, tricky exemption from sales tax, which of course it isn't."

Except that the alternative (pushed by an organization which I am a member of) would have permitted the states to impose sales taxes.

I'm sorry, what alternative? And what's it got to do with ITFA or Paul Krugman?

slarti,

The alternative version of the ITFA bill which was being considered at the same time.

Wait...I sense we're going round and round on this one:

Except that the alternative (pushed by an organization which I am a member of) would have permitted the states to impose sales taxes.

ITFA precludes assessment of state sales tax?

slarti,

Yes, by locking in the then-current state of the law on sales taxes, rather than changing it and letting the states impose sales taxes to the fullest extent Constitutionally permitted. See this from lizardbreath above:

"(b) Pre-ITFA federal law bars states from imposing sales taxes on purchases located in other states (i.e., catalog, internet purchases) No one worried about this much until the Internet, because it just wasn't enough volume -- use taxes were a gesture toward taxing those sales equitably, but have never been really collected from consumers.

(c) Constitutionally, a state may not require a vendor to collect use taxes for it unless the vendor has a nexus with the state -- roughly unless it does business within the state."

Krugman's pointing to this bill as if it's some new, tricky exemption from sales tax, which of course it isn't.

No, it's a bill that blocks the closing of a pre-existing loophole -- just because the problem was there before the bill doesn't meen that the bill isn't what's in the way of fixing it.

Look, when you have to phrase your complaint in these terms: Krugman's "pointing to the bill as if it's some new, tricky exemption from sales tax", isn't it clear that he hasn't made the kind of simple error of fact that he was accused of? You can disagree with his emphasis, or think that he's making a bad point, but I don't think you can fairly say that he doesn't understand what effect IFTA has on whether these transactions will or will not be taxed.

Except that the alternative (pushed by an organization which I am a member of) would have permitted the states to impose sales taxes.

Dantheman -- you actually know things about this stuff? I am so taking a back seat to you now.

Further, since the concept of a nexus or doing business in a state is somewhat elastic, states could have tried to impose sales tax on internet sellers who:

a. had warehouses in that state (even if the goods in question were not shipped from there).
b. had offices in that state.
c. advertised in that state.
d. advertised in periodicals where a significant portion of the readership is in that state.

and likely others I haven't thought of.

Yes, by locking in the then-current state of the law on sales taxes, rather than changing it and letting the states impose sales taxes to the fullest extent Constitutionally permitted.

Well, something that can be undone sort of points to something else that can be undone, as well, doesn't it? If one can change the way states collect tax on sales, one can certainly modify (or simply repeal and rewrite) ITFA to accomodate new, more equitable and enforceable tax law. I don't know the background on this, but it doesn't look to me that ITFA for the purpose of impeding legitimate sales tax revenue collection.

LB,

"you actually know things about this stuff? I am so taking a back seat to you now."

I know something about it, primarily from reading the monthly magazine that the organization I belong to puts out (which has far more interesting articles than those dealing with sales taxation policy). I recall this being the subject of intense lobbying and numerous articles, even more so in 2001 (when this bill was extended) than in 1998. I don't deal with it on a day-to-day basis, though.

On the other hand, I am leaving the office soon, and won't look in again until after the kids go to bed, so you may need to keep up the good fight for the next few hours.

Slart-

Sure, IFTA can be repealed or modified. Any law can. What does that have to say about whether it was a problem in the first place?

slarti,

"If one can change the way states collect tax on sales, one can certainly modify (or simply repeal and rewrite) ITFA to accomodate new, more equitable and enforceable tax law."

Yes, one can (and Krugman believes we should). McCain's version of the ITFA bill (as Krugman described) forbade doing that for 3 years, which has since been extended. The other version of the bill did not. Krugman's column attacked McCain for his supporting the version of the ITFA that became enacted into law.

What does that have to say about whether it was a problem in the first place?

But it wasn't the problem, now, was it? Again, this law is being pointed to as if it were the source of some new tax dodge, when in fact it's nothing of the sort. It may have the (intentional or otherwise) effect of making it more difficult to amend the aforementioned problem, but that's neither here nor there.

Given that it has that effect, where's Krugman's error of fact?

Has what effect? Any "effect", as far as Krugman's article is concerned, was accomplished by shortcomings in existing law.

Has the effect of making it impossible to close the loophole while IFTA remains the law.

What's Krugman's error of fact?

To elaborate: Krugman's column doesn't say that sales taxes were collected on Internet transactions before ITFA was passed -- in fact, he says they weren't. He says that ITFA now prevents states from starting to collect such taxes. This is correct.

Obviously, you can disagree about whether ITFA is a bad thing -- Krugman thinks it is, you don't have to -- but I don't see what he has said in the column that is factually in error.

Has the effect of making it impossible to close the loophole while IFTA remains the law.

Irrelevant. The "loophole" (bug? feature?) was, as I've pointed out, an aspect of prior law. I'm sympathetic to this argument to the precise extent that states were falling all over themselves in an effort to effect a change in tax law prior to ITFA. Seven years later, is there a workable alternative that stands a chance of getting passage?

He says that ITFA now prevents states from starting to collect such taxes. This is correct.

No, I thought we made it quite clear, above, that it was incorrect. States can collect, after ITFA, whatever sales tax they were previously empowered to collect. You and Krugman would have no change equal a tax cut, when it is in fact a continuation of the same way of doing business.

Slart: I'm sympathetic to this argument to the precise extent that states were falling all over themselves in an effort to effect a change in tax law prior to ITFA.

Dude -- did you read Dantheman's post?

Dan: Except that the alternative (pushed by an organization which I am a member of) would have permitted the states to impose sales taxes.

There was an alternative ready to go, so I guess you're sympathetic.

Me: He says that ITFA now prevents states from starting to collect such taxes. This is correct.

It's still correct -- you ignored the word 'starting'. IFTA was enacted in 1998 -- large scale retailing over the Internet was still pretty new, and the states hadn't yet fixed the out-of-state sales tax loophole. IFTA means that the states can't fix the loophole and start to collect sales/use/other equivalent taxes on Internet transactions.

You and Krugman would have no change equal a tax cut, when it is in fact a continuation of the same way of doing business.

You're accusing Krugman of getting his facts wrong. Where does he say tax cut? Where does he imply that IFTA is a tax cut? He points out that Internet retail is untaxed for no good economic reason (is this an error? why?) and that IFTA prevents the states from imposing taxes on Internet retail that would match taxes on in-state retail (is this an error? why?).

I get that you disagree with Krugman about whether IFTA is bad law. He's an opinion columnist; disagreement is part of the game. But to say that his facts are in error, either sloppily or dishonestly, you have to quote him making a statement of fact and show that it's wrong.

If you have done so, I missed it -- remind me of the time of the post, if you would. If you haven't done so, please quote a statement of fact Krugman makes, and demonstrate its incorrectness. (That is, if the column does say "ITFA cut taxes on Internet retail", and I missed it, I'm being an idiot, and would appreciate being straightened out.) If you can't do either of the above, then accept that while you disagree with his conclusions, that this column does not show him misstating facts.

Shoulda previewed. Italics begone!

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