Posted tagged ‘financial inform’

Why Friends Don’t Let Friends Cite The Atlantic’s “Business and Economics Editor”: Further to the Megan McArdle is Always Wrong chronicles.

July 24, 2010

Update: Greetings to everyone coming here via TBogg, Susan of Texas, Eschaton and Brad DeLong — and my thanks to those good folks for the links.  A special thanks, of course, to Ms. McArdle herself, who tweeted this very post, apparently authored by “some idiot.” She has forgotten, I think, that here in Boston, that’s an epithet of glorious memory.  This idiot welcomes readers from wherever they come.

Though if I were just a little snarkier, I would add that being insulted by McArdle calls to my mind the experience of being attacked by the British Tory parliamentarian Sir Geoffrey Howe, as described by Roy Hattersley Denis Healey:  it is like being savaged by a dead sheep.

Update 2: Welcome everyone coming over from the GOS, Post Bourgie, Rortybomb, C&L, and Richard Eskow/HuffPo.  Rortybomb  and Eskow dramatically expand the takedown — reccommended.   I know I’m missing others  — for which I apologize; I’ve been a little swamped by the response to this one.

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The old joke* about Richard Nixon asked “How can you tell when he’s lying?”

The answer:  “When his lips move.”

I’ve finally come to the conclusion that something similar must be said about Megan McArdle.  Perhaps lying is too harsh a word — but the serial errors that all fall on the side that supports her initial claims and that recur again and again in her work suggest to me that something other than mere intellectual sloth and sloppiness is the driver.

Ordinarily, such a record wouldn’t matter much, especially in journalism.  In theory, a series of clips as riddled with error as McArdle’s would end most careers in high prestige journalism.  Hot Air might still find a use for you, but The Atlantic?

But the problem is that McArdle is useful:  she advances an agenda — that which comforts the comfortable — and she does so with what I think is truly her original talent, the capacity not to notice the ridicule and ferociously dismissive debunking that she so often attracts.

Being able to be wrong in a form and fashion that aids the powerful, and possessing the ability not to mind a life that must be thus lived in willing embrace of error…now that’s a trick.

But it is one that does real damage to the republic, as the post that aroused this latest bout of McArdle-bashing demonstrates.  In it, McArdle seeks to discredit Elizabeth Warren as a potential leader of the new Consumer Finance Protection Agency to be set up under the just-passed financial reform bill.

To do so she tries to impugn both the quality and integrity of Warren’s scholarship, and she does so by a mix of her usual tricks — among them simple falsehoods;** highly redacted descriptions of what Warren and her (never mentioned) colleagues actually said;*** and descriptions of Warren’s work that are inflammatory — and clearly wrong, in ways she seems to hope no one will bother to check.****

You can see the footnotes for quick examples of these sins.  Here, I’ll confine myself to pointing out that in this post you find McArdle doing the respectable-society version of the same approach to argument  that Andy Breitbart has just showed us can have such potent effect.

To see what I mean, you have to follow through two steps: how McArdle constructs her picture of a feckless, partisan and dishonest Warren — and then how she generalizes from it.

Partly, McArdle relies on the strength of her platorm.  As “Business and Economics editor of The Atlantic” she routinely writes in assertions that we are to accept on her say -so.

(As an aside — this argument from authority is never that strong, and, as McArdle demonstrated very recently, can descend to pure, if unintended, comedy (go to Aimai’s comment at the bottom of Susan of Texas’s post), its flip side is that  different.  Everytime someone gets something thing wrong in a consequential way, the loss of trust should advance, ratcheting up with each such error detected, to the point where it becomes the safest default position to assume that someone — McArdle, for example — is always wrong till proven otherwise.)

But back to the anatomy of McArdle’s campaign. I’m going to focus on just one example where McArdle asks us to believe that her argument is strong and supported by the literature — without quite fessing up to what her supporting material actually says.  As part of her sustained campaign to deny the significance of medical bankruptcy in the US, she writes,

A pretty convincing paper argues that the single best predictor of bankruptcy is simply how much debt you’ve accumulated–not income, job loss, divorce, or what have you.  People who declare bankruptcy tend to have nicer stuff than others at the same income level.

The problem here is that the paper does not actually say quite what McArdle implies it does.  She’s mastered here the trick Sally Field played in Absence of Malice — she’s managed to come up with a sentence that is accurate…but not truthful.

In fact, should you actually take the trouble to read the cited study (by UC Davis finance prof, Ning Zhu) you will find material like this:  “households with medical conditions are twice more likely to file for bankruptcy (33.5 percent) than households that do not have medical conditions (14.8 percent)…;”

And this: “Having medical problems increases the households’ filing probability by 7.6 percent and one standard deviation of increase in employment tenure is associated with an increase of 9.2 percent in the filing probability. Such changes represent 48.40 and 58.60 percent deviation from the baseline probability….;”

And this “our results provide qualitative support for both the adverse event and the over-consumption/strategic filing explanations.”

To be fair Zhu concludes that overconsumption — spending too much on housing, cars and credit cards account for more of the total burden of bankruptcy than medical events, divorce or unemployment, as McArdle wrote.

But as McArdle completely failed to acknowledge, Zhu does so while using somewhat more stringent standard for counting medical expenses as a factor in bankruptcy than other scholars employed — as he explicitly acknowledges.  He concedes the continuing significance of medically -induced bankruptcy.  He acknowledges what he believes to be a weak underweighting of that factor (because some people pay for medical expenses on credit cards).  And he notes that a number of other studies, not limited to those co-authored by Warren, come to different conclusions.

In other words:  McArdle correctly describes one conclusion of this paper in a way that yields for its readers a false conclusion about what the paper itself actually says.  And look what that false impression implies:  if  medical bankruptcy is a trivial problem, society-wide, then Warren can be shown to be both a sloppy scholar and, as McArdle more or less explicitly says, a dishonest one as well.

And that leads me back to the thought that got me going on this post.  It seems to me that what we read in McArdle here is a genteel excursion into Andrew Breitbart territory.  Like the Big Hollywood thug, she misleads by contraction, by the omission of necessary context, by simply making stuff up when she thinks no one will check (again, see the footnotes for examples).  And like Breitbart, she does so here to achieve a more than on goal. The first is simply to damage Elizabeth Warren as an individual, to harm her career prospects.  Hence ad hominem stuff like this:

Her work gets so much attention because it comes from a Harvard professor.  And this isn’t Harvard caliber material–not even Harvard undergraduate.

Which neatly sets up this punch line:

..this woman is now under consideration to head a powerful new agency.  If this is how she evaluates data, then isn’t that going to hamper her in making good policy?

But there is a larger goal as well.  McCardle hasn’t given up, as the GOP hasn’t either, on the idea of simply undoing all that the Obama administration has managed to push past the outright lies and bad faith arguments of the right.  So here she does her bit for the cause, taking every attempt to sideswipe health reform:

Obviously, this was also held out as an argument for PPACA, [the health care reform bill] making an implicit promise to the American people which I believe to be false.

So Warren is the target, and there is no doubt that McArdle is trying by any means to discredit her to the public — but the larger ambition here is to discredit major reforms undertaken by the Obama administration in a kind of guilt by association. (See, e.g. the connection some GOP leaders are making between Shirley Sherrod and the negotiated settlement in the discrimination case brought by African American farmers and the USDA.)

McArdle is much more housebroken than many of her fellow travelers of course.  She knows which fork to use (or perhaps better, that particular ocean margin from which the right people secure their salt).  People who would not dream of taking Breitbart seriously still quote McArdle as a seemingly respectable source.

But she’s doing the same kind of work.

Caveat Lector.

And with that, I’m done with McArdle-world for the summer.  Just not worth suffering the Ceti Eel infections that result from too frequent a return to that particular planet.

(In German!  It sounds even more fun..)

*of the “hurts too much too laugh, but I’m too big to cry” variety.

**She cites as her first reason to disbelieve the most recent study in which Warren was one of four co-authors that the response rate to the study questionnair was, at 20%, too low to rule out sample bias.  In fact, as the authors report on the first page of the paper to which McArdle linked in an earlier post that their response rate was 46.5%.  Remember: the default position is that McArdle is Always Wrong.™

***E. g. McArdle rights writes that Warren and her colleagues “defined anyone with $1000 worth of medical bills as having a medical bankruptcy…”  This is how Himmelstein, Thorne, Warren, and Woolhandler actually described their criteria: “We developed two summary measures of medical bankruptcy. Under the rubric “Major Medical Bankruptcy” we included debtors who either (1) cited illness or injury as a specific reason for bankruptcy, or (2) reported uncovered medical bills exceeding $1,000 in the past years, or (3) lost at least two weeks of work-related income because of illness/injury, or (4) mortgaged a home to pay medical bills. Our more inclusive category, “Any Medical Bankruptcy,” included debtors who cited any of the above, or addiction, or uncontrolled gambling, or birth, or the death of a family member.”

That is: once again, what McArdle wrote was accurate inaccurate — but not true. Per commenter perspicio below, and in more detail from commenter Nylund.  Warren and her colleagues in the 2001 paper set $1,000 in uncovered medical bills as the threshold, one they raised to $5,000 in their 2007 study.  Big, big difference between a total bill, in part or entirely covered by insurance, and true out-of-pocket costs — and one which McArdle simply ignores.  Naughty, naughty.

****E.g. — she writes of Warren’s book, co-authored with Amelia Warren Tyagi, “that Warren simply fails to grapple with what her thesis suggests about the net benefits of the two-earner family.  ….. Warren kind of waves her hands and mumbles about social programs and more supportive work environments.  There is no possible solution outside of a more left-wing government.”

Except, of course, Warren does not say anything of the kind.  Instead, of the indebtedness trap that captures two income families, especially after divorce, the two authors write this stirring socialist slogan:  “If a family does not have the income to qualify for a loan at a reasonable rate they should not get that loan” (italics in the original; The Two Income Trap, p. 152.)

It is true that Warren and Tyagi suggest a number of possible policy changes to make the overall landscape of work, family and finance more equitable, from changes to the law on predatory lending to suggestions for child care subsidies.   But here’s their final thought, a rousing demand for Castro-esque intervention into the daily life American families:  “…families need to safeguard themselves” — which is followed by suggestions that range from switching to cheaper preschools and opting to buy or even rent houses smaller than those that put you at the edge of one’s financial capacity.

Warren and Tyagi argue, that is, that individuals should make defensive financial decisions to shield themselves from sudden catastrophic changes in their income.  Wouldn’t John (or Jane) Galt applaud?

Also, I have to say that in this context, this is the measure of McArdle’s character, her moral quality.  There is chutzpah here,  given how little tangible intellectual accomplishment as McArdle can muster to compare with Warren’s resume, and more when she speaks Warren’s mumbling or hand waving in the conext of a paragraph in which the ellipsis above fills in as follows: “Admittedly, I don’t quite know what to say either, but at least I can acknowledge that it’s a pretty powerful problem for the current family model.”

But while we can admire the bravado here, sort of, at bottom this is exactly the kind of petty character assassination that McArdle performs so well, and to such nasty purpose.  A mumbling, vague, imprecise Warren is obviously no one to run an important agency…and thus the post-long mission of character and career assassination is advanced.  Loathesome.

Image:  El Greco, “An Allegory with a Boy Lighting a Candle in the Company of an Ape and a Fool” c. 1600.