USC professors' book full of surprises for right-wing publisher

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http://www.latimes.com/business/la-fi-hiltzik-20120805,0,1818707.column

By Michael Hiltzik

August 5, 2012

"Promoters of ideological campaigns just love college professors.

That may sound implausible, but it's not so hard to understand: Attaching a professor's name to your cause confers instant credibility and projects objectivity, there are lots of professors around, and their professional work may be so technical and abstruse that no one will know if they really do support your position. As a result, it's a rare campaign that won't at one point or another publish a list of faculty members, jangling with PhDs, backing it up.

One wonders if that explains the strange relationship between the right-wing multimillionaire Joe Ricketts and Selahattin and Ayse Imrohoroglu, a Turkish-born husband-and-wife team of economists at the University of Southern California.

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Selahattin, 54, and Ayse, 53, are the authors of "The Fiscal Cliff," a book published by a Ricketts nonprofit called Ending Spending, which normally ranks Washington politicians by their support of a federal spending cap. The organization released the book last week with great fanfare, announcing that it was sending a copy to every congressional and Senate office in Washington, evidently to advance its position that government is too big and taxes are too high.

That's the point made in the book's introduction by Brian Baker, the president of Ending Spending.

As it happens, however, the Imrohoroglus' book doesn't quite say that. In some respects, their take may be just the opposite: Tax revenues are too low and government can't be shrunk just like that.

"We've got tax revenues at 15% of GDP," Selahattin Imrohoroglu says. "You've got to come back to the '80s and '90s." In those decades, tax revenues averaged 19.5% of gross domestic product; were that ratio in place today, it would mean additional revenue for the federal government of more than $700 billion a year, "and then all the gloom and doom projections go away."

The Imrohoroglus didn't even learn until their manuscript was finished that it would be published with Baker's introduction, or for that matter that the publisher would be Ending Spending. And it doesn't sound as if they were especially overjoyed at the news.

"I read the proposed introduction and said, 'This is some political statement that has nothing to do with the book,'" Selahattin says. He had to type "Ending Spending" into Google to figure out what it was.

But if the Imrohoroglus found their deal with Ricketts to be full of surprises, Ricketts may have discovered that the manuscript he got wasn't quite what he counted on either. "Their solution [to the deficit issue] is a little different from what I had expected," he states in his own introduction.

So are their perceptions of where the problems lie. Ricketts writes that "our country's debt-to-GDP ratio is a more important indicator of the condition of our overall economy than a price-to-earnings ratio is for a publicly traded company" (the public debt ratio is currently about 70%).

Selahattin Imrohoroglu thinks that may be an overstatement. "Some people think there's some magical ratio, and if you go above that, the world will end," he says. "I think the healthiest indicator is the long-run growth rate of the country."

Once past the introductions by Ricketts and Baker, the text of "The Fiscal Cliff"— with the exception of one very large and very curious error — turns out to be a nuanced, highly technical and not especially ideological analysis of fiscal policy. The text focuses on two key ideas: As Selahattin describes them, these are that the U.S. has to sharply increase its tax revenue (chiefly by eliminating the mortgage deduction and other tax breaks) and get healthcare costs under control.

Perhaps the most interesting question about the book is how Ricketts and the Imrohoroglus came together. Ricketts made his money as founder of what is now TD Ameritrade, the online brokerage. He and his family own the Chicago Cubs.

He's the founder and financial backer not only of Ending Spending but the Ending Spending Action Fund, a super PAC that supports conservative candidates. Baker says the two entities are "totally distinct," yet they're both funded by Ricketts and headed by Baker.

According to federal election reports collected by the Center for Responsive Politics, the PAC spent nearly $900,000 in 2010 trying to defeat Senate Majority Leader Harry Reid (D-Nev.) and contributed more than $150,000 this year to the successful Texas GOP primary campaign of tea party favorite Ted Cruz, who is seeking a Senate seat.

Ricketts also solicited a proposal for an ad campaign attacking President Obama. After it leaked into public view in May, Ricketts disavowed the project, which was built around references to Obama's relationship with the controversial pastor Jeremiah Wright, a cherished right-wing theme.

The Imrohoroglus, who studied under Nobel economics laureates Edward Prescott and Thomas Sargent at the University of Minnesota, joined USC in 1989 and are currently professors of finance and business economics at its Marshall School of Business. Their oeuvres comprise serious macroeconomic studies dealing with such topics as social insurance and taxation.

When I met Selahattin last week in his USC office — Ayse is out of the country for the summer — I found him an engaging, voluble man with a sure grasp of the complexities of fiscal policy. He told me he and Ayse voted for Obama in 2008, though he hinted that they've been disappointed with his political skills. They believe in fiscal stimulus in principle but don't believe a bigger program is needed in the U.S. He says Social Security's fiscal problems are negligible and easily addressed by raising payroll taxes and indexing the retirement age to life expectancy.

To this day, he says, he and his wife have never met or spoken with either Ricketts or Baker.

The book offer, he explained, came their way via Mukesh Bajaj, a former USC economist who now runs his own consulting firm and who has worked with Baker in the past. The Imrohoroglus demurred at first — "I said there are better people than us, we are not native speakers, we are geeky scientists" — but Bajaj wore them down by arguing that it was worth communicating what they knew about fiscal policy and promising there would be no interference from Ricketts.

That's been the case, Imrohoroglu says. On the other hand, the authors did need help putting their thoughts into the vernacular for a general audience. That came from Webster Stone, a writer and film producer associated with Ricketts.

The resulting text, which took about a year to write, has a certain tonal discordance. Passages resonating with the Imrohoroglus' academic voice and reflecting some of their published work, referring to things like the "Cobb-Douglas production function," bump up against breezy pronouncements that wouldn't sound out of place coming from the mouth of, say, a Hollywood scriptwriter.

Then there's that major glaring error. The book's closing chapter asserts that "raising tax revenues" will lead to "negative consequences," such as a reduced gross domestic product. For support, the text cites a projection by the Congressional Budget Office that higher tax rates will lead to a reduction in GDP by as much as 17.6% by 2035.

Here's the problem: The CBO projection says exactly the opposite. It says the projected 17.6% collapse would result not from raising taxes, but from reducing taxes.

Specifically, the CBO forecasts that retaining the Bush tax cuts scheduled to expire a few months from now would increase the deficit and the federal debt to unsustainable levels, crashing the economy.

Imrohoroglu couldn't explain how this error got into his text. (Another, more minor error: Although the text describes the CBO projection as applying to GDP, it actually applies to gross national product, or GNP — a related, but larger, economic measurement.)

Yet what's most intriguing about the mistake is that the erroneous version of the CBO's projection fits perfectly with Ending Spending's ideology, which is opposed to tax increases. But the correctversion fits more closely with the Imrohoroglus' viewpoint, which is that the country's fiscal future depends on boosting tax revenues as a percentage of GDP.

The authors' findings don't square with the Ending Spending agenda in other respects. Baker's introduction complains, for instance, that "our government is too big, spends too much, and does too many things for too many people."

When I asked Imrohoroglu to respond, he said, "He's entitled to his opinion." The authors, by contrast, show that U.S. tax revenues and spending on social benefits both rank lower as a percentage of GDP than those of many other industrial nations, including Britain, Canada, France and Germany. Imrohoroglu says he doesn't see much leeway for future cuts in discretionary spending in the federal budget.

"The Fiscal Cliff," as it turns out, is an instructive book, worth reading, just not in the way that Ricketts and Baker seem to have anticipated. For readers interested in really figuring out where the U.S. economy stands today and how to move it forward, the best course may be to focus on what the Imrohoroglus wrote themselves — and toss the rest in the trash."

DynoDon
Joined:
Jun. 29, 2012 10:24 am

Comments

This publisher may actually start reading manuscripts before they publish in the future. They will never make this mistake again-none of that truth to power stuff.

DynoDon
Joined:
Jun. 29, 2012 10:24 am

"raising tax revenues" vs reducing tax revenues. raising and reducing both start with r and end with ing, and educ is something right wing loons are always against. So their automated transcript publishing software is probably like the autocorrect on text phones, educ is always deleted. Dept of educ has probably never seen a page entry either.

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douglaslee
Joined:
Jul. 31, 2007 4:01 pm

That filthy dirtbag Ricketts hates government and hates spending, except when it benefits him.

He's the worse kind of corporate thief, filthy rich, yet still with his greedy hand out, looking for taxpayer breaks, all the while screaming about government spending.

I hope the Cubs lose FOREVER.

http://www.chicagotribune.com/business/columnists/ct-biz-0523-phil-20120523,0,6637453.column

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al3
Joined:
Jul. 31, 2007 4:01 pm

Chicago ought to have tried the Green Bay Packers model. I bet the windy city would be interested in owning it. I was a Cubs fan, but White Sox look better now that you mention it.

Grew up a Reds fan when Frank Robinson was playing. We went to Crosley Field [Owner of the Crosley car company] that held seating for about 27,500.

Crosley

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douglaslee
Joined:
Jul. 31, 2007 4:01 pm

This is off topic but I got sidetracked looking back at Crosley

Crosley Chronology...

Begin Viewing at the Following Date

[ 1900 ] [ 1910 ] [1920 ] [1930 ] [FLOOD ] [1940 ] [1950 ] [1960 ] [1970 ] [INDEX ]

1869 -The first all-professional baseball club in the world, the 1869 Cincinnati Red Stockings. After moving from the foot of Richmond Street, where the Queesgate Playfield is now, due to poor access for the horse cars, they played at the Union Grounds (approximately where the fountain is in front of the Cincinnati Museum Center (Union Terminal). In this (c.pre-1934) photo of Cincinnati's West End, you will see, highlighted in RED, the location of the Reds Union Grounds. Highlighted in blue, you will see Redland Field (Crosley), prior to art deco scoreboard (1934), stadium lights (1935), pressbox (1938), and upper deck extensions (1939).

1882 -The 1882 Cincinnati Red Stockings are currently playing two blocks north of the future Crosley Field site, at the Bank Street Grounds. Note in the Photo: The uniform jerseys the players are wearing are all of different colors and patterns. Worn throughout the league, jerseys and caps that separated players by position rather than team (e.g. first basemen wore striped scarlet and white caps/jerseys, shortstops wore maroon caps and jerseys, etc). The only way to tell the teams apart was to look at the color of the stockings, as these were unique. This was done to help the fans recognize the players, as at the time, numbers were not used on uniforms. Why? Because "only convicts wear numbers" was the current thinking of the day. All six teams playing in the American Association's inaugural season of 1882 wore the same uniform, but with different colored socks (Cleveland- Blue Stockings, Boston- Red Stockings, etc.) By 1883, the league did away with their "clown costumes" (as these duds were not-so-affectionately known) and allowed teams to use more traditional uniforms.

1884 - Having lost their lease at the "Bank Street Grounds" (NW corner of Western Row & Bank Street), "The brickyard" at Findlay Street and Western Avenue (two blocks south) is selected as the new location for the Reds' newest ballpark. This site is actually an old brickyard and the NW side of it is below street level (York Street side). Rather than level the whole site it is left alone, which results in the natural left field "terrace" (originally not in play with initial home plate placement) present throughout the life of this baseball location. League Park (originally named American Park until 1890) is laid out, and hastily built, primarily of wood. Home plate is placed in the SE corner of the park. After the first game, as the fans rush for the street, a portion of the flimsy stands collapse and numerous fans are injured. There are no deaths, however, as popularly believed. Prior to League Park the Reds had played their games at three other locations, all within two miles of Findlay and Western.

1888 -The 1888 Cincinnati Red Stockings are currently playing at League Park, their new location two blocks south of Bank Street Grounds, and the future home of Crosley Field.

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douglaslee
Joined:
Jul. 31, 2007 4:01 pm

one last off topic

If you are close to my age and a long time fan of the Cincinnati Reds, then you need read no further. This is for the benefit of those younger fans who never had the chance to see the Reds play in the confines of Crosley Field. I attended my first Reds game in 1956. I was six years old and had a friend whose father knew somebody that knew somebody, so I got to visit the dugout before the game. You could actually do that back then, you know. Even if you didn't know somebody who knew somebody, you could still stand alongside the dugout gate and talk to the players. Anyway, I enjoyed fourteen wonderful seasons at Crosley Field taking in the sights, sounds, and smells. It was a glorious place to watch baseball.

Even though you seemed closer to the game and more involved in the action, there was always the possibility of getting seated behind a girder. Click here now, to see what I mean. At the time, it was an inconvenience, but looking back, I remember it was always the topic of conversation on the way to the ball park. But, it didn't really matter, not really.

I remember the smells also. Ibold cigars mixed with peanuts and beer. They actually had cigar vendors going up and down the isles. Think about that for a minute. Men who never smoked in day to day life, would light up a big Ibold cigar and puff away. Why? Because they could and because they were at the ballgame! That is what the ballgame is all about; getting away from the routine, kicking back and relaxing, doing what you didn't or couldn't day to day and enjoying yourself. We aren't allowed to do that anymore, not even at the ballgame. We can still drink beer, but not after the seventh inning. Try lighting up a cigar at Cinergy Field while you relax in your seat.

I also remember the players arriving in the dugout by way of the stands. They walked right by you! There they were, right in the stands with you! For a kid, it was wonderful! Now, of course, they appear from the abyss below the stadium to which they return after the game. To a kid, it might appear that that is where they live, or at least they don't come from the same places we do.

Times have changed. The sights, sounds and smells of baseball have changed. Baseball has changed (Reds vs. ChiSox) and not the World Series! Who would have guessed. Baseball, despite the changes, is still the greatest of games. Some changes have been for the better. Black players have raised the level of talent to a new tier. Now we see the best players in the world, not just the best of some of the players in the world. AstroTurf (Not!). The resurection of the ballpark vs. the soup bowl stadium (YES!). Playing regular season games with American League teams (TO BE DETERMINED!)

Now we are to get a new ballpark. I hope, for the kids sake, it is a real ballpark. I hope it has grass and fungo circles and even a terrace in the outfield instead of a warning track. Did you know that Crosley field was the only park not required to have a warning track? It was felt that the terrace was sufficient warning for any ball player that the wall was coming near.

Did you know that even the mighty Babe Ruth fell on the left field terrace? The date was May 28, 1935. Ruth went back on a sharply hit line drive to left field. As he started going up the steep slope his legs gave way, and ducking, the ball landed behind him. After that, the Babe took himself out of the game. It was after just one more game that Babe Ruth retired. What was Ruth doing at Crosley in the first place? Remember, at the end of his career he played in the National League, for the Boston Braves.

So, here is to Crosley Field! What a great place to grow up!

I remeber the girder and the cigars. Babe Ruth fell on my birthday to be.. my mom was 2 yrs 8mo..

The terrace was left field that went uphill and you had to climb it going backwards to chase a short left fly.

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douglaslee
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Jul. 31, 2007 4:01 pm

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Who Should an Economy Serve?

The top one percent own half of all the world's assets. In stark contrast, the bottom fifty percent of the world owns less than one percent. According to the 2014 Global Wealth Report from Credit Suisse, global inequality has surged since the 2008 financial collapse. The report explains that while global wealth has more than doubled since the year 2000, the vast majority of overall growth has gone to those who were already wealthy.

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