Tuesday, January 6, 2004
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Good retail news
Before the end of the year there was a lot of murmuring about the holiday shopping season being subpar. Just to pick a name out of a hat, Paul Krugman wrote a week ago:
Well, the data are coming in, and things look pretty good across the board. From today's Chicago Tribune:
Read the whole thing -- there's promising news about employment in the retail sector as well.
And here's the National Retail Foundation's (NRF) press release on the topic, which has the following quote:
Slightly off-topic, the NRF also reports robust online sales:
UPDATE: The New York Times has more mixed news:
At the same time, this was the most interesting phenomenon in the story:
posted by Dan on 01.06.04 at 10:19 AM
Oops, you must have missed this report somehow--guess all the glowing news might have blinded you a tad:
WASHINGTON (Reuters) - New orders for U.S. factory goods sank in November, staging the largest drop in over half a year, the government said on Tuesday in a report suggesting a patchy recovery in the hard-hit manufacturing sector.
Factory orders dropped 1.4 percent in November, the Commerce Department (news - web sites) said, after rising 2.4 percent the previous month. The decline, the steepest since April, was close to Wall Street expectations for a drop of 1.5 percent.
The fall reflected a revised 2.5 percent drop in orders for expensive, long-lasting durable goods and a 0.2 percent drop in goods expected to last less than three years.
The report showed a decline in orders in several categories in November. Demand for transportation equipment tumbled 1.3 percent and orders for computers and electronic products plunged 10.7 percent.
Orders of non-defense capital goods excluding aircraft, which economists use to gauge business spending plans, fell 5.1 percent.
Dan, I'm just hoping you got it right this time.posted by: GT on 01.06.04 at 10:19 AM [permalink]
It's worth remembering that the NRF tends to be pretty optimistic about projections and puts a rosy glow on what it can. That being said, fingers crossed....
Krugman's assumption is worth questioning, too. Perhaps recent high growth rates in Wal-Mart-style stores has been because the recession pushed middle-class people to shop at low-end stores during the hard years. The excellent numbers at high-end stores could be the return of those shoppers due to the recovery. Without more information, I'm not sure how you could attribute those sales to the rich rather than to the middle class with more money to burn this year.
Of course, that perspective doesn't fit the class warfare angle very well, and thus may be a less appealing story....posted by: richard on 01.06.04 at 10:19 AM [permalink]
EVERY year retailers complain and fret in the months leading up the the Christmas season....they always do this and end up lowering expectations....recently I noticed a stat that shows that the stocks of most large retailers decline in the weeks prior to X-mas and spike up in the weeks after....this is because they always lower expectations before the holidays...it's easy for sales to exceed expectations and this causes the bump in stock price later on...posted by: futch on 01.06.04 at 10:19 AM [permalink]
Dan again wrongly picks on Krugman...
First, he ignores the main point of the column- that the economic "recovery" has been very good for high income earners, but has left a weak job market for wage earners. Dan has mis-read the widening income disparity in the United States. Having real income levels the same or slightly above what they were in the 1970's does not excuse policies that give more to the wealthy at the expense of everyone else (and for this real harm to exist, it does not necessitate that absolute income must drop).
Second, the fact that sales grew across the board does not contradict Krugman. Krugman said gains at high end stores were large, and that modest at lower-end stores. That an industry trade group says the increase "appears" (Dan forgot to underline that word) to be among diverse retail segments which are not defined, it not that convincing.
Third, the clip dedicated to online purchases is completely irrelevant to whether 1. the recovery has helped lower income Americans as much as upper income wealth holders or 2. retails sales are up or 3. retail sales at stores catering to low income wage earners are up.
The online sales indicate, if anything, Krugman is correct, that people with online access (who generally have more money than others) increased spending, while gains have been modest at low income serving retailers.
No matter what the final numbers are, the basic argument of Krugman's column is correct. And press releases by an organization that has a lot to gain from increased consumer confidence does not change that.
He should pick a different name out of the hat next time.posted by: mrkmyr on 01.06.04 at 10:19 AM [permalink]
Don't forget that not just the long-abused manufacturing sector is still wobbly but so is the its long-touted replacement the service sector! The economic recovery is still clearly fragile at best.
You are of course correct about Mr. Krugman's article. While I haven't always agreed with him and thought he was over-reaching on the whole Great Unravelling business in blaming the short-term economic performance on Bush, he redeems himself here by writing an excellent article on how Bush is clearly messing up the long-term economic prosperity of America. I notice that Dan is conspicuously silent on this point despite his fondness for picking at Krugman's weaker or less obvious arguments.
As you suggest in your counter-argument Holiday sales seem to be driven by Online sales and this would support Krugman's hypothesis that it is the better half primarily benefiting. This of course as you note is consistent with the increasing disparity in wages between top earners and the likely salary your average worker will receive. From the performance of company executives as witnessed by the recent never-ending string of scandals and company pratfalls it's clearly not warrented by increased management performance!
“Dan has mis-read the widening income disparity in the United States. “
Liberals prefer focusing on “inequality” issues because this allows their agenda to seem halfway plausible until the world literally comes to an end. Nothing will ever be deemed satisfactory. No matter how much the economy improves, they can always assert that someone lives below the average. Of course, this is inherently so. Somebody is going to be at the bottom of the economic pile.
I am not an economist. Nonetheless, I have been far more accurate with my economic predictions than Paul Krugman. I have the moral and intellectual right to call him a punk! Does this mean that I’m more brilliant than our Princeton economist? No, Krugman’s problem is that he wishes to receive the adulation of the liberal “elite.” He is no longer an objective and rational human being, but a Captain Ahab out to destroy his Moby Dick. The man has been driven mad by his contempt towards President George W. Bush.
“...he (Paul Krugman) redeems himself here by writing an excellent article on how Bush is clearly messing up the long-term economic prosperity of America.”
In the long run, Keynes declared, we are all dead. Heck, one can forevermore concede that everything may seem to be improving---but Armageddon is right around the corner. What did Karl Popper say concerning a hypothesis which can never be disproved?posted by: David Thomson on 01.06.04 at 10:19 AM [permalink]
"What did Karl Popper say concerning a hypothesis which can never be disproved?"
That it can't be called "science," but it can still have "meaning."
I might even agree with some of what you write, David T., but --
That's just begging the question...posted by: Arthegall on 01.06.04 at 10:19 AM [permalink]
As you suggest in your counter-argument Holiday sales seem to be driven by Online sales and this would support Krugman's hypothesis that it is the better half primarily benefiting. This of course as you note is consistent with the increasing disparity in wages between top earners and the likely salary your average worker will receive.
I don't see how you or Krugman can arrive at this conclusion from this particular factoid. Perhaps rising online sales are an artifact of improved confidence in the economy combined with increased access to the Internet for the middle class. Without more specific data about who is doing the shopping and why, we're just riding our favorite hobby horses.
Furthermore, it is precisely the sort of social programs that Krugman and his ilk advocate that are the cause of the long-term structural weaknesses in the US economy. As of 2003, the US has promised to pay out $15 trillion more in Social Security benefits to current beneficiaries than it will take in over their lifetime. Against this kind of deficit, Bush's $450 billion is a drop in the well. The high corporate tax rates and expanded social welfare programs that Krugman advocates will simply turn the US into "Old Europe" while sending high-tech jobs and corporations fleeing to India and China. "Income inequality" is a bullshit distraction to avoid discussing this fundamental structural problem with the US economy.
In summary, while Bush & the Republicans bear some resposibility for damaging the long-term health of the US economy by refusing to hold down discresionary spending, Krugman and those policy wonks who share a like mind with him bear far more blame for advocating and implementing an unsustainable welfare state.
I might even agree with some of what you write, David T., but --That's just begging the question...”
Nothing could be further from the truth. We will never live in a perfect world. Moreover, the very attempt to bring about a utopian society will almost certainly result in a hell on earth. The goal line is constantly being raised and we are suppose to remain hysterically upset if absolute equality remains beyond our grasp. Thus, I am very accurate to pragmatically declare "The only thing that truly matters is whether those who have less to offer the general economy are still able to enjoy a decent income." God forbid, if you listen to anyone promising you anything more. The horrors of Communism are proof that utopian aims inevitably result in disastrous results. Do you still disagree? If so, please offer your own pithy sentence of what we might optimally expect of a society comprised of imperfect human beings.
“In summary, while Bush & the Republicans bear some resposibility for damaging the long-term health of the US economy by refusing to hold down discresionary spending, Krugman and those policy wonks who share a like mind with him bear far more blame for advocating and implementing an unsustainable welfare state.”
Yup, I completely agree with this assessment. The Bush administration deserves to be taken to task for chickening out when it comes to welfare spending (and that’s what it truly is!) and protectionist issues. President George W. Bush is merely the lesser of evils. Furthermore, the Democrat Party is committed to economic policies guaranteed to impoverish this country. I adamantly believe, for instance, that a free trader can no longer capture the Democrat presidential nomination. This issue has been added to the abortion litmus test. Neither an antiabortionist candidate, nor one advocating free trade has any chance of being the standard bearer of today’s Democrat Party. Does anyone think otherwise?posted by: David Thomson on 01.06.04 at 10:19 AM [permalink]
David T., what you're arguing for (if I understand you correctly) is "maximizing the minimum" as a (or rather, the main) criterion for judging social welfare. That's certainly one way of looking at it, but claiming it to be the most "accurate" measure of social success is... begging the question.
You're trying to win by fiat, and claim that your answer to the primary question of political science is obvious.
Other people might suggest different measures; you mention one yourself, "The goal line is constantly being raised and we are suppose to remain hysterically upset if absolute equality remains beyond our grasp." Certainly we could strive for a society that is fair, putting the concept of Justice on equal footing with that of Minimum Social Welfare.
I'm not saying it's the right thing to do... but it's certainly not wrong on its face.
"The horrors of Communism are proof that utopian aims inevitably result in disastrous results. Do you still disagree?"
Yes, I disagree, in that I don't think Communism "proved" anything about "Utopian aims." Communism as we have seen it was a disaster of epic Hitlerian proportions, a wild failure that encouraged genocide and economic collapse -- but that proves nothing, a point I would hope a man who quotes Popper could understand (try re-reading just the first chapter of his Logic of Scientific Discovery).
Obviously, the problem of society's proper end or goal has been debated for thousands of years. Just because you wave your hands and write that your criterion is "very accurate" doesn't make it so.
One additional point: just because "absolute equality" will never be achieved, doesn't mean (if you take it to be a valuable thing) that we shouldn't strive for it.
I may never be a perfectly moral person, but that doesn't mean I should stop trying...posted by: Arthegall on 01.06.04 at 10:19 AM [permalink]
“You're trying to win by fiat, and claim that your answer to the primary question of political science is obvious.”
I’m sorry but it is inherently unarguable that everybody cannot be at the top of the economic heap. There will always be those on the bottom. Somebody will have to empty out the bed pans and sweep the halls. Not everyone will earn a million dollars a year on Wall Street. This point is non-debateable.
“Certainly we could strive for a society that is fair, putting the concept of Justice on equal footing with that of Minimum Social Welfare.”
You certainly have been highly influenced by John Rawls. The late Harvard philosopher conveniently dodged the question of earning. He was tacitly, if not even explicitly, a determinist. Everybody is a victim of their given circumstances. Rawls would almost certainly run away from the logical conclusion of his premise: the state must be powerful and all intrusive. We will be equal whether we like it or not. How does this work in the real world? I have nowhere the basketball ability of Michael Jordan. It is therefore much easier to break his legs to make us both equal on the basketball. I am simply too far behind the curve to ever catch up.
“”Yes, I disagree, in that I don't think Communism "proved" anything about "Utopian aims." Communism as we have seen it was a disaster of epic Hitlerian proportions, a wild failure that encouraged genocide and economic collapse -- but that proves nothing, a point I would hope a man who quotes Popper could understand (try re-reading just the first chapter of his Logic of Scientific Discovery).”
Communism offers us overwhelming evidence that a desire for perfect equality will bring about a hell on earth. This was inevitable regardless of the possible virtuous intentions of the Communists. The goals of a viable human society must be reasonable---and achievable. Impossible aims merely frustrate us and tempt some to do evil things. I either accept the harsh fact that I will never be able to dunk a basketball over Shaq O’Neal, or I will become a very miserable fellow.
“One additional point: just because "absolute equality" will never be achieved, doesn't mean (if you take it to be a valuable thing) that we shouldn't strive for it.
I may never be a perfectly moral person, but that doesn't mean I should stop trying...”
Morality is not the same thing as equality. The world will always be a better place if we increasing become more moral. Perfect equality, however, is intrinsically impossible. Once again, I must remind you that somebody must do the menial work. Somebody will have to clean the floors and toilets of your university.
Your prose is very florid but completely impractical. The poor will always be with us. Also, I approve of individuals getting not just rich but obscenely filthy rich. Nor am I particularly fond of the clearly unsustainable present social services system. However, as a conservative opposing excessive governmental intervention in private affairs it is precisely because of my conservative principles that I have to say you're dead wrong.
You point out the impracticality of achieving absolute equality. I agree that it is not even a desirable goal in theory - incentive motive. However that plays both ways. If to create an incentive to produce more by working smarter or harder, we allow some people to better themselves over others then the obverse must also be true. The obverse is that no matter how good the minimum social welfare experienced may be, without a reasonable chance to better their situation through equal opportunity then they will never be content.
Just as the Communist artificial ideal of absolute equality was both unattainable and undesirable, your proposed extreme is both unattainable and undesirable.
It is unattainable because political influence naturally gravitates toward monetary centers of gravity. Being powerful and being rich are closely linked socially, though not in a one-to-one correlation and not all in the same individuals. A vastly prejudiced distribution of share of income would inevitably become prejudiced politically.
This is not sustainable. A situation where a few percentage of the population has the overwhelming share of both the wealth and political status is a recipe for revolution. To extend your Communist reference, the idiotic excesses of Stalinism and Leninism were made plausible by the completely idiotic excesses of the boyars and Tzar on the other end of the spectrum. Psychology backs this up, because it confirms that people don't judge their prosperity on an absolute basis by comparing their welfare to other members of their own society.
What you suggest is by the known principles of human nature completely politically unsustainable. Second of all it is completely undesirable. It is undesirable because what always happens when income distribution becomes too extremely slanted is that corruption, cronyism, and inequality of opportunity result. The rich are not generally interested in necessarily rewarding merit. Situations from Victorian England, Hugo's France, the Gilded Age, to the present Wall Street follies shows that the excess accumulation of wealth generally breeds stupidity- and stupidity that is not necessarily weeded out by competition. The wealthy can often insulate themselves from the worst consequences of their own follies, and it is other people that suffer and everybody is impoverished.
From a standpoint of pure incentive motive theory, your proposal would eventually result in a maximally corrupt business environment. This is undesirable from a meritocratic and eglatarian equal opportunity perspective!
The rest of your ideas are similarly ridiculous.posted by: Oldman on 01.06.04 at 10:19 AM [permalink]
The idea that income disparity is increasing is not derived from the cited ideas, but is a statistic deriving from other sources. It is cited here as an additional part of the argument, and not a conclusion from it. As for how such a thing can be determined, one way is to observe average CEO pay as a ratio compared against the average pay of all the employees in their companies. It has risen precipitously, without any evidence of a corresponding increase in management quality. There are other similar ways to determine such things, such as the percentage of total income earned by the top 10%,5%,1%, etc. of the income scale distribution. It all points to the same thing, the rich are getting richer. DT is not disputing this to the best of my knowledge. He seems instead to be saying it's okay as long as the poor and everyone else are doing the same or better as well.
Furthermore your analysis of the actions of GWB's Admin is flawed. I whole hearted agreely that the current social services systems needs to be completely restructured. As a conservative, I would rather see more personal savings plans and personal retirement accountants and less reliance on government redistribution of income. However, my argument again as a conservative is that GWB is striking a death blow against this possibility.
He's cut taxes, and I don't love taxes the simple fact is that reforming the social services system is going to take money - allot of money. By this I don't mean to suggest expanding entitlements, but anyone with sense can tell you that the only feasible way to do this is to continue to fund current obligations while getting additional money to start an alternative and then through attrition phase out the old system.
In light of that, and that the GWB Admin has added unsustainable discretionary spending and increased entitlement obligations (Medicare drug benefit) then this is a set-up for a complete disaster. While I have no love for liberals who have given us the present unsustainable system, GWB and co. are clearly making things worse and squandering any chance to change the course of events before we get driven into a demographic brick wall of entitlement spending obligations.
So while I hate liberal welfare state theory and practice and have no wish to see the United States emulate the European model, I hate GWB and co. more for betraying not only conservative principles but creating an imminent generational disaster that will dwarf the blunders of the liberals.posted by: Oldman on 01.06.04 at 10:19 AM [permalink]
" Krugman wrote a week ago:
It was a merry Christmas for Sharper Image and Neiman Marcus, . . . "
Article must be a forgery. Krugman would never be so unPC as to use the word "Christmas" which has been banned from polite society.posted by: erp on 01.06.04 at 10:19 AM [permalink]
Back to the topic, the healthy reported Xmas season sales do not include (for most retailers) skyrocketing gift card purchases. Wal-Mart and other major retailers do not count those sales as revenue until the cards are actually redeemed, a process which takes several quarters. One reason retailers love the cards is because it brings people back into stores where they usually spend more than the gift card total.posted by: GP on 01.06.04 at 10:19 AM [permalink]
David Thomson said, "An alleged widening income disparity is a silly concern."
I think he missed my point entirely (easy enough to do since I only wrote one sentance). I am saying that whether or not "the poor" have certain levels on consumer goods does not emliminate concerns over what a fair distribution of societies wealth is. It is a justifiable position to take David or Daniels view that a very large income gap is beneficial to society by incouraging industrius behavior. But that those at the lower end have certain creature conforts is not an adequate rational for giving ever larger portions of Americas wealth to the highest income earners.
Oh yeah, you forgot "health care" in your list. Opps.
As demonstrated by commentes above, I believe arguments regarding the most correct/fair/efficient way to distribute societies resources is too much for blog comments. They do little, but get people mad at each other.
I'll just add the most economically efficient proposal for income redistribution that nobody likes: a guarenteed minimum income (no work necessary).
posted by: mrkmyr on 01.06.04 at 10:19 AM [permalink]
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