Monday, September 10, 2012

Economist Tim Groseclose explains the Laffer Curve

In this Prager University video, economist Tim Groseclose explains the Laffer curve along with the implications of a recently published study.

Hat tip to Calvin Freiburger.

Sunday, September 09, 2012

Grading PolitiFact: Missing context doesn't count against Obama's manufacturing jobs claim

 MOSTLY TRUE – The statement is accurate but needs clarification or additional information.
--Principles of PolitiFact and the Truth-O-Meter

The issue:

(clipped from

The fact checkers:

Louis Jacobson:  writer, researcher
Bridget Hall Grumet:  editor


PolitiFact's fact checking on this one is slightly deeper than "President Obama tells the truth, therefore it's true."

PolitiFact doesn't provide much context with this claim.  Real Clear Politics has a transcript, though (bold emphasis added):
We can choose a future where we export more products and outsource fewer jobs. After a decade that was defined by what we bought and borrowed, we're getting back to basics, and doing what America has always done best:  We're making things again.
I've met workers in Detroit and Toledo who feared they'd never build another American car. And today, they can't build them fast enough, because we reinvented a dying auto industry that's back on top of the world.
I've worked with business leaders who are bringing jobs back to America, not because our workers make less pay, but because we make better products. Because we work harder and smarter than anyone else.
I've signed trade agreements that are helping our companies sell more goods to millions of new customers, goods that are stamped with three proud words: Made in America.
After a decade of decline, this country created over half a million manufacturing jobs in the last two and a half years. And now you have a choice: we can give more tax breaks to corporations that ship jobs overseas, or we can start rewarding companies that open new plants and train new workers and create new jobs here, in the United States of America. We can help big factories and small businesses double their exports, and if we choose this path, we can create a million new manufacturing jobs in the next four years. You can make that happen. You can choose that future.
Mr. Obama made his remarks in drawing a supposed contrast between his leadership, past and future, with that of his Republican opponent in the presidential election ("You can choose that future").  Obama therefore takes credit to some extent for the increase in manufacturing jobs.  PolitiFact, contrary to its supposed policy, does not bother to rate the degree to which the president was responsible.

PolitiFact just grades whether the numbers add up:
The rise in manufacturing jobs that Obama is referring to may be modest compared to the prior decade’s decline, but he has described the numbers carefully. We rate his statement True.
PolitiFact's "True" rating, of course, supposedly means "The statement is accurate and there’s nothing significant missing." 

But significant information was missing from Mr. Obama's claim.  A CNN fact check noted:
(A)s with other statistics cited during the three-day Democratic convention, it's not quite the whole picture. Manufacturing sector employment is still down by about 500,000 since Obama took office and by more than 3.7 million since the start of the recession in December 2007.
"Nothing significant missing"?

There is a real growth in manufacturing owing largely to exports.  But a Brookings Institution report offers scant evidence that the reasons Mr. Obama gives provide the explanation for the increase.  Brookings does credit Mr. Obama's free trade agreements with Panama, Columbia and South Korea for helping to stimulate foreign trade.  But Brookings and the president omit mentioning that the negotiation of the free trade agreements preceded Mr. Obama's presidency and also fail to mention the subsequent delay in finalizing the deals.

The United States and South Korea had originally signed the FTA back in June 2007. The one with Columbia had been signed in November 2006 while the Panama FTA was signed in July 2007.
Maybe if those agreements had passed through the Democrat-controlled Congress in 2008 it might have lessened the effects of the recession and accelerated the recovery of American manufacturing.

PolitiFact's fact check, consisting of eight short paragraphs and a total of three reference sources, doesn't show much effort at reaching the truth.  It acknowledges parts of the story omitted by Mr. Obama yet fails to figure the lack of context in when making its final ruling.  The ruling claims Mr. Obama "describes the numbers carefully" but shows no evidence that the president mentioned the relevant caveats.

It resembles a rubber stamp more than a fact check.

The grades:

Louis Jacobson:  F
Bridget Hall Grumet:  F

No "A" for effort.


Readers might register surprise at what counts as a manufactured export.

(click image for enlarged view)

Update Sept. 10, 2012:

Sometimes the transcript doesn't do justice to the original.  With the live speech, Mr. Obama apparently ad-libbed on the text of his speech.  Rather than the three proud words "Made in America" he said something a bit different:

Hat tip to Power Line.

Friday, September 07, 2012

Grading PolitiFact (Texas): All out of "out of context" where Romney's concerned

HALF TRUE – The statement is partially accurate but leaves out important details or takes things out of context.
--Principles of PolitiFact and the Truth-O-Meter

The issue:

(clipped from

The fact checkers:

W. Gardner Selby:  writer, researcher
John Bridges:  editor


I've tipped off that the key aspect to this fact check concerns whether Mitt Romney's statement was taken out of context.  Let's track PolitiFact's treatment of that aspect of this fact check.

"Mitt Romney, quite simply, doesn’t get it," the San Antonio mayor (Julián Castro) said in his Sept. 4, 2012, keynote at the Democratic National Convention in Charlotte, N.C. "A  few months ago, he visited a university in Ohio and gave the students there a little entrepreneurial advice. ‘Start a business,’ he said. "But how? ‘Borrow money if you have to from your parents.’
That's the Julián Castro version of the context.  Romney was giving the students "a little entrepreneurial advice."

PolitiFact appears to accept the accuracy of Castro's version of the context at face value with its phrasing, in the very next paragraph, of the question of the fact check would answer:
Did Castro accurately recap Romney’s student advice?
PolitiFact might consider a different angle on that question:  Was Romney giving entrepreneurial advice to the students at Ohio's Otterbein University?

With both questions in mind, watch the video.

In context, Romney was talking about the historical climate for American entrepreneurship. He didn't tell the students to borrow money from the parents. He painted a general picture of ways entrepreneurs chase their dreams, and he gave borrowing money from parents as one example. Notably, the line segued to the example of Jimmy John, who founded a nationally popular sandwich chain using startup money borrowed from his father.

Castro gets the words right, but both Castro and PolitiFact get the context wrong. PolitiFact's conclusion doesn't fly as a result:
Castro told his fellow Democrats that Romney urged students at an Ohio university that if they have to, they should borrow money from their parents to start a business. Romney, in fact, said that. Castro’s claim rates True.
By PolitiFact's statement of principles, Castro's claim is "Half True" at best.

The grades:

W. Gardner Selby:  F
John Bridges:  F

PolitiFact stayed on the same page with Castro as he took Romney's statement out of context.  Castro attempted to make Romney seem out of touch and distant with the supposed suggestion of borrowing money to start a business.  But Romney was correct that borrowing money from parents is one way Americans historically chase their entrepreneurial dreams.  Plus the comment served as an apparently deliberate introduction to the Jimmy John anecdote.

Fact checkers should emphasize such contextual elements, not bury them.

Grading PolitiFact (Texas): Burying the underlying argument for Julián Castro

Context matters -- We examine the claim in the full context, the comments made before and after it, the question that prompted it, and the point the person was trying to make.
--Principles of PolitiFact and the Truth-O-Meter
 Or not.

The issue:

(clipped from

The fact checkers:

Sue Owen:  writer, researcher
W. Gardner Selby:  writer
John Bridges:  editor


PolitiFact maintains a bad habit of applying its standards inconsistently.  This fact check of a statement by San Antonio mayor Julián Castro serves as an example of one common variety of PolitiFact's inconsistency.  Many raw facts have little significance when considered alone.  But often politicians will use an apparently true fact in constructing a fallacious or questionable argument.  PolitiFact's principles assure us that PolitiFact takes such factors into account (see epigraph above).  In practice, that often isn't the case.

On with the fact check:
Addressing the delegates assembled in Charlotte, N.C., Castro said that San Antonio residents recognize the value of investing in pre-Kindergarten and student college loans. "We're investing in young minds today to be competitive in the global economy tomorow [sic]," Castro said. "And it's paying off. Last year the Milken Institute ranked San Antonio as the nation's top-performing local economy."
PolitiFact Texas does "examine" the context after a fashion.  The quotation of Castro succinctly illustrates his point:  Investing in pre-K and student college loans paid off in that San Antonio's economy leads the nation in the Milken Institute rankings.

That's Castro's obvious point, and PolitiFact does enough fact checking to show that his point is highly suspect:
The San Antonio Express-News credited the city’s rise to reasons "including military base realignment, drilling in the Eagle Ford Shale and the growth of health care" in a Dec. 16, 2011, news story.
But military base realignment, producing shale oil and expanding the health care job sector are pretty much the same as "investing in young minds."  Aren't they?

Texas’ rise in the ranks, the Express-News wrote, came partly because of downturns in other parts of the country. The story quoted research economist James Gaines of Texas A&M University’s Real Estate Center: "Our growth rate and advancement isn't all that wonderful. We've managed to stay flat or have very small positives. But because everybody has so many negatives, we look so much better."
But aren't those downturns in other parts of the country ultimately because of their failure to match San Antonio's investment in pre-K education and student loans?

PolitiFact provides no evidence in support of Castro's claimed cause-and-effect relationship.  Instead, we get a ruling based entirely on the raw claim about San Antonio's ranking which completely ignores Castro's underlying point:
San Antonio hasn’t just been holding steady in the economic downturn; it’s been gaining ground, even compared to other Texas cities. Castro’s statement rates True.
If the rest of the nation wants to keep up with San Antonio then maybe we'd better increase our investment in education.  Hmmm?

PolitiFact editor Bill Adair, from January 2012:
About a year ago, we realized we were ducking the underlying point of blame or credit, which was the crucial message. So we began rating those types of claims as compound statements.
Adair referred to claims associated with an executive's tenure, such as "Since X became governor, crime has decreased 50 percent."  Such claims imply that the executive carries some significant share of responsibility for the change.  In this case, Castro did not explicitly claim personal credit at all, but he did offer an explanation for San Antonio's economic performance--an explanation that jibes with the Democrat Party's prescription for helping the economy.

PolitiFact presented evidence that severely undercut Castro's point, yet gave him an unqualified "True" rating.

That's the kind of thing you get with PolitiFact.  Bias in story focus contributes heavily to the resulting "Truth-O-Meter" ratings.

The grades:

Sue Owen:  F
W. Gardner Selby:  F
John Bridges:  F

Update/Correction June 10, 2015: Replaced wrong fact check URL with the correct URL.

Tuesday, September 04, 2012

Best. President. Ever?

Via The New York Times:
“I think that I’m a better speechwriter than my speechwriters,” Mr. Obama told Patrick Gaspard, his political director, at the start of the 2008 campaign, according to The New Yorker. “I know more about policies on any particular issue than my policy directors. And I’ll tell you right now that I’m going to think I’m a better political director than my political director.”