J. Bradford DeLong's Blog, page 2082

Economist's View: Has Consumption Inequality Mirrored Income Inequality?

Mark Thoma sends us to Mark Aguiar and Mark Bils:

Economist's View: Has Consumption Inequality Mirrored Income Inequality?: This paper by Mark Aguiar and Mark Bils finds that "consumption inequality has closely tracked income inequality over the period 1980-2007":

Has Consumption Inequality Mirrored Income Inequality?, by Mark A. Aguiar and Mark Bils, NBER Working Paper No. 16807, February 2011: Abstract We revisit to what extent the increase in income inequality over the last 30 years has been mirrored by consumption inequality. We do so by constructing two alternative measures of consumption expenditure, using data from the Consumer Expenditure Survey (CE). We first use reports of active savings and after tax income to construct the measure of consumption implied by the budget constraint. We find that the consumption inequality implied by savings behavior largely tracks income inequality between 1980 and 2007. Second, we use a demand system to correct for systematic measurement error in the CE's expenditure data. Specifically, we consider trends in the relative expenditure of high income and low income households for different goods with different income (total expenditure) elasticities. Our estimation exploits the difference in the growth rate of luxury consumption inequality versus necessity consumption inequality. This "double-differencing,'' which we implement in a a regression framework, corrects for mis-measurement that can systematically vary over time by good and income group. This second exercise indicates that consumption inequality has closely tracked income inequality over the period 1980-2007. Both of our measures show a significantly greater increase in consumption inequality than what is obtained from the CE's total household expenditure data directly.

Why is this important? (see also "Is Consumption the Grail for Inequality Skeptics?"):

An influential paper by Krueger and Perri (2006), building on related work by Slesnick (2001), uses the CE to argue that consumption inequality has not kept pace with income inequality.

And these results have been used by some -- e.g. those who fear corrective action such as an increase in the progressivity of taxes -- to argue that the inequality problem is not as large as figures on income inequality alone suggest. But the bottom line of this paper is that:

The ... increase in consumption inequality has been large and of a similar magnitude as the observed change in income inequality.

Double-Dip Watch

Ryan Avent:

Growth: A disappointing day: I AM attending a conference this morning, and so blogging will be light. But let me draw your attention to two stories before I go. First, America's fourth quarter GDP growth has been revised down:

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 2.8 percent in the fourth quarter of 2010, (that is, from the third quarter to the fourth quarter), according to the "second" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 2.6 percent...The downward revision to the percent change in real GDP primarily reflected an upward revision to imports and downward revisions to state and local government spending and to personal consumption expenditures (PCE) that were partly offset by an upward revision to exports.

And Britain's economy shrank by more than initially thought:

Britain’s economy shrank more than initially estimated in the fourth quarter, complicating the task of the Bank of England as a split deepens among policy makers on whether to withdraw stimulus.Gross domestic product fell 0.6 percent from the previous three months, compared with an initial estimate for a 0.5 percent drop, the Office for National Statistics said today in London. The statistics office said its “best estimate” for the impact of cold weather on the data remains 0.5 percent. The slump was led by construction and investment.

Why Mitch Daniels Should Not Be President

Paul Krugman from 2001:

Reckonings; Pants On Fire: Published: August 24, 2001

To: Mitch Daniels, Office of Management and Budget

Dear Mitch:

I have a suggestion. It's dishonest and irresponsible -- but I suspect that doesn't bother you. And it would help you squirm out of a problem that we both know isn't going away.

True, your bobbing and weaving have been impressive. Some people have actually bought your line that the surplus has vanished because of Congressional big spending, even though the spending numbers have hardly changed since your previous, bullish projection. And most reporters, bless their tiny little heads, have written about the budget shortfall as if it were a temporary problem; they haven't looked at Table 3 of your own report, which despite all your cooking of the books projects only a razor-thin non-Social-Security surplus for the next five years. But there's more trouble ahead. You bullied the Congressional Budget Office into delaying its own budget projection until next week, so that you could get your numbers out first. Still, when the C.B.O. numbers come out everyone knows that they will look considerably worse than yours. And of course we both know that the truth is actually even worse than that, because the C.B.O. must pretend to believe... when you claim that you can provide prescription drug insurance for a third of what anyone else thinks it will cost, or that you won't adjust the alternative minimum tax even when millions of irate voters ask why their tax cut has been snatched away....

In the end, we both know, the truth will become apparent. Eventually there will be no disguising the fact that thanks to the tax cut the nation has failed to make adequate preparations for the demographic deluge, that money that was supposed to be accumulated to pay retirement benefits has been used instead to provide big tax cuts to the very, very affluent.

But then that's been the plan all along, hasn't it?

51 Herbert Hoovers

AP:

GDP: Economy Slows on Cuts From State and Local Levels: Deeper spending cuts by state and local governments slowed U.S. economic growth in the final three months of last year. The government's revised estimate for the October-December quarter illustrates how growing state budget crises could hold back the economic recovery. The Commerce Department reported Friday that economic growth increased at an annual rate of 2.8 percent in the final quarter of last year. That was down from the initial estimate of 3.2 percent. State and local governments, wrestling with budget shortfalls, cut spending at a 2.4 percent pace. That was much deeper than the 0.9 percent annualized cut first estimated and was the most since the start of 2010...

@MayorEmanuel

From Shunn:

Inhuman Swill : Into the time vortex!: The most entertaining and rewarding piece of fiction of the past six months has been, without a doubt, the Twitter stream of @MayorEmanuel. @MayorEmanuel is, or was, a delightfully profane Rahm Emanuel impersonator whose tweets started appearing six months ago, after the real Emanuel expressed his intention to enter the Chicago mayoral race...

Urban Architecture and Revolution

I tried to snarf a copy of Nezart Al-Sayyad's book out of his office last week, but he pointed out that (a) he was still hunting typos and (b) he only had one copy of the galleys...

Aaron Britt:

Design and History of Tahrir Square - People - Dwell: Nezar AlSayyad is a Cairo-born professor of Architecture, Planning and Urban History and the chair of Center for Middle Eastern Studies at the University of California at Berkeley. He's also a lucid thinker and the author of the forthcoming book Cairo: Histories of a City from Harvard University Press. I've spoken with Nezar a couple times before, but with the magnificent success of the recent Egyptian protests and with Tahrir Square entering the popular American lexicon I wanted to put a few questions about the design, history, and spirit of the place to the professor. I was fascinated by what he had to say.

Can you give us a bit of history of Tahrir Square in Cairo?

Tahrir Square came into existence 140 years ago during the time of another ruler who was considered ruthless, Ismail. He had lived in Paris, in Haussmann's Paris and saw the changes that came about in France under Napoleon III and he wanted to remake Cairo in the image of Paris. If George Bush was the decider, Ismail was the modernizer. So he redesigned an area that was all pretty much vegetation adjacent Nile, and from time to time would be flooded by the Nile. It was known as Ismailia Square because of him.

But it's not really a city square in strict urban planning terms is it?

No, it's not exactly a square at all. For one, the Nile borders one edge, so that's not straight. And it's not surrounded by buildings on all four sides, it only has buildings on one side. It's an ill-defined space that is constituted by five or six adjacent spaces, and in a sense no one really paid attention to it.

Why from a design angle was it so successful as a point of protest?

Twenty-three streets lead to different parts of it, which is why it was so successful with the demonstrators. There isn't one big boulevard that you can block off, and there are two bridges that lead to it as well. One of them saw a clash between the regime and the demonstrators. It's also the case that all of downtown Cairo, which isn't that big, has a street that leads to side or another of Tahrir Square.

Tell me about the name, Liberation Square, and it's import.

Tahrir Square got its name by a presidential decree in 1955. It was supposed to be a sign of Egypt's liberation from the British--who actually left in the 20s--and also from the monarchy of King Farouk. Actually in Tarhrir Square there is a large pedestal that was put in place in the time of King Farouk that was supposed to have a statue of him on top. But it never got built and power changed hands so President Nasser decided to keep the pedestal with nothing on it as a reminder of the failure of the Egyptian monarchy. But honestly it's not really clear to me what liberation the presidential decree was recognizing. In my opinion Tahrir Square didn't earn it's name until January 25th, 2011...

Oh, the Farmer and the Google Should Be Friends--NOT!!

Danny Sullivan:

Google Forecloses On Content Farms With “Farmer” Algorithm Update: In January, Google promised that it would take action against content farms that were gaining top listings with “shallow” or “low-quality” content. Now the company is delivering, announcing a change to its ranking algorithm designed take out such material. The new algorithm — Google’s “recipe” for how to rank web pages — starting going live yesterday, the company told me in an interview today.... [t]he change impacts 12% (11.8% is the unrounded figure) of its search results in the US, a far higher impact on results than most of its algorithm changes. The change only impacts results in the US.... Officially, Google isn’t saying the algorithm change is targeting content farms. The company specifically declined to confirm that, when I asked. However, Matt Cutts — who heads Google’s spam fighting team — told me, “I think people will get the idea of the types of sites we’re talking about.”

Well, there are two types of sites “people” have been talking about in a way that Google has noticed: “scraper” sites and “content farms.” It mentioned both of them in a January 21 blog post:

We’re evaluating multiple changes that should help drive spam levels even lower, including one change that primarily affects sites that copy others’ content and sites with low levels of original content. We’ll continue to explore ways to reduce spam, including new ways for users to give more explicit feedback about spammy and low-quality sites. As “pure webspam” has decreased over time, attention has shifted instead to “content farms,” which are sites with shallow or low-quality content....

By the way, sometimes Google names big algorithm changes, such as in the case of the Vince update. Often, they get named by WebmasterWorld, where a community of marketers watches such changes closely, as happened with last year’s Mayday Update. In the case of the scraper update, no one gave it any type of name that stuck. So, I’m naming it myself the “Scraper Update,” to help distinguish it against the “Farmer Update” that Google announced today. “Farmer Update?” Again, that’s a name I’m giving this change, so there’s a shorthand way to talk about it. Google declined to give it a public name, nor do I see one given in a WebmasterWorld thread that started noticing the algorithm change as it rolled out yesterday, before Google’s official announcement....

Google wouldn’t confirm it was targeting content farms, but Cutts did say again it was going after shallow and low quality content. And since content farms do produce plenty of that — along with good quality content — they’re being targeted here. If they have lots of good content, and that good content is responsible for the majority of their traffic and revenues, they’ll be fine. In not, they should be worried....

Cutts, in my interview with him today, made a point to say that none of the data from that tool was used to make changes that are part of the Farmer Update. However, he went on to say that of the top 50 sites that were most reported as spam by users of the tool, 84% of them were impacted by the new ranking changes. He would not confirm or deny if Demand’s eHow site was part of that list. “These are sites that people want to go down, and they match our intuition,” Cutts said. In other words, Google crafted a ranking algorithm to tackle the “content farm problem” independently of the new tool, it says — and it feels like tool is confirming that it’s getting the changes right.

By the way, my own definition of a content farm that I’ve been working on is like this:

Looks to see what are popular searches in a particular category (news, help topics)
Generates content specifically tailored to those searches
Usually spends very little time and or money, even perhaps as little as possible, to generate that content

The problem I think content farms are currently facing is with that last part — not putting in the effort to generate outstanding content....

Will the changes really improve Google’s results?... Cutts tells me Google feels the change it is making does improve results according to its own internal testing methods. We’ll see if it plays out that way in the real world.

Washington's Deficit-Hawk Pretenders

We are live at The Week: Even if Republicans outdo Obama's spending cuts, they'll fritter it away on tax cuts and repealing health care reform:

The Obama administration's proposed spending freeze promises to reduce certain categories of government spending over the next decade by $400 billion. This is a bad idea. It will cut not fat, but muscle. It will leave our country worse off. So why cut important spending instead of scrapping unnecessary excess? The fat is jealously guarded by Senators from states with small populations. And Obama's spending freeze on non-defense discretionary spending targets the muscle.

By contrast, we do not know what the Republican House's long-term budget proposal would cut. They have not told us. Perhaps it will cut non-defense discretionary spending by a total of $800 billion over the next decade, relative to

its baseline level. Perhaps it will not do anything. Perhaps it will cut muscle and add to fat and leave us about where we are now. We really do not know.

Suppose the Republican plan actually does cut spending by $800 billion. The House Republicans then want to take that $800 billion, and spend $200 billion of it trying to repeal health care reform. They then want to take what's left, and use it to pay for extending the Bush marginal tax rate reductions on high-earning Americans. But it will not stretch quite that far. Extending those Bush tax cuts is projected to cost $750 billion, and there is only $600 billion left in this hypothetical scenario. There's a $150 billion shortfall.

The Obama proposal looks to reduce debt 10 years from now, by $400 million. This theoretical House Republican proposal looks to increase the debt 10 years from now, by $150 billion.

And over the past 30 years, Democratic budget proposals have by and large delivered what they promised. Republican proposals, by contrast, have all turned out to produce much bigger deficits than were pledged at the start.

If you are a real deficit hawk, there is simply no contest as to which political party you should support right now.

But there are a lots of people in Washington who are paid in either dollars or favor points to pretend to be deficit hawks when they are no such thing.

Clive Crook: The Republican Party Deserves Political Annihilation

It took Clive long enough to get to where the reality-based community has been for... quite a while. But welcome!

Clive Crook:

A daft way to tackle America’s debt: Tea Party true believers may be salivating at the prospect... [of s]hutting down the government.... They did it once before, during the Clinton administration, and were slammed: the shutdown rescued the Clinton presidency. To do it in 2011, with the economy laid low and financial markets still twitchy, would be the limit of irresponsibility. It would be betting the recovery to make a point. This time, political annihilation might follow, and the party would deserve it...

Adolf Hitler Liveblogs World War II: February 24, 1941

Adolf Hitler:

Munich: Fellow Party Members:

The twenty-fourth of February is always, and rightly so, a day of vivid memories for us. On this date and from this very hall began the Movement's amazing march to victory, which bore it to the helm of the Reich, to leadership of the nation and its destiny. This day is a great day for me too.

Surely, it is seldom that a political leader can stand before the same band of followers that hailed his first great public appearance twenty-one years before, and repeat the same program. Seldom can a man proclaim the same doctrines and put them into practice for twenty-one years without at any time having had to relinquish a single part of his original program. In 1920, when we met for the first time in this hall, many of you must have asked yourselves: 'Dear me, a new party, another new party! Why do we want a new party? Don't we have parties enough? . . .'

Thus began a heroic struggle, opposed at its inception by nearly all. Nevertheless, the essential objects of the Movement embraced the decisive element. Its clear and unambiguous aim did not allow the Movement to become the tool of definite and limited individual interests, but raised it above all special obligations to the particular obligation of serving the German nation in its entirety, of safeguarding its interests regardless of momentary dissensions or confused thoughts. Thus, today, after twenty-one years, I again stand before you....

It was in this very town that I began my struggle, my political struggle against Versailles. You know this, you old members of my party. How often did I speak against Versailles! I probably studied this treaty more than any other man. To this day, I have not forgotten it. The treaty could not be abolished by humility, by submission. It could only be abolished by reliance upon ourselves, by the strength of the German nation.

The days of bitter struggle necessarily led to a selection of leaders. When today I appear before the nation and look at the ranks that surround me, I look at a band of men, real men who stand for something. On the other hand when I regard the cabinets of my opponents, I can only say: 'Quite incapable of being put in charge even of one of my smallest groups.' Hard times resulted in a selection of first class men who naturally caused us a little anxiety now and then. Everybody who is worth his salt is sometimes difficult to handle. In normal times it is not always easy to get divergent elements to work together instead of against one another. But as soon as danger threatens, they form the most resolute body of men. Just as selection is a natural consequence of war and brings real leaders to the fore among soldiers, so in the world of politics selection is the outcome of struggle. It was a result of this slow development, this eternal struggle against opposition, that we gradually acquired leaders with whose aid we can today achieve anything.

When, on the other hand, I look at the rest of the world I am obliged to say: They were simply asleep while this miracle was taking place. Even today they refuse to grasp it. They do not realize what we are, nor do they realize what they themselves are. They go on like a figure of 'Justice' - with blindfolded eyes. They reject what does not suit them. They do not realize that two revolutions in Europe have created something new and tremendous. We are fully conscious of the fact that a second revolution, where the assumption of power occurred earlier than it did in our country, proceeded parallel with ours. The fascist Revolution, too, yielded the same results. Complete identity exists between our two revolutions, not only as regards aims, but also as regards methods. Over and above this there is our friendship, which is more than co-operation with a purpose in view. Nor do our opponents realize yet, that once I regard a man as my friend, I shall stand by him....

I wish to display no faltering in this matter. There cannot be the slightest doubt that the bond uniting the two revolutions, and especially the bond uniting their two leaders, is indissoluble, and that one will always support the other. Moreover, it is a common enemy whom we shall defeat.

There was a time when Italy, fascist Italy, which is engaged in the same struggle as we are, which is shut in in the same way as we are, which is as over-populated as we are and, up until now, has been given no better chance of living than we, kept powerful enemies engaged in our behalf. Numerous British ships were engaged in the Mediterranean; numerous British airplanes were engaged in the African colonies. This was a very good thing for us, for, as I told you the other day, our warfare at sea is just beginning. The reason for this is that we first wanted to train new crews for the new submarines which will now make their appearance on the scene. Let no one doubt that they are about to appear.

Just two hours ago I received a communique from the Commander-in-Chief of the Navy stating that the reports of the last two days from our ships and submarines on the high seas reveal that another 215,000 tons have been sunk; that of this total 190,000 tons were sunk by submarines alone, and that this figure includes a single convoy of 125,000 tons which was destroyed yesterday.

From March and April on, those gentlemen will have to be prepared for something very different. They will see whether we have been asleep during the winter, or whether we have made good use of our time. During the long months when we had so few submarines to fight our battles, Italy kept large forces engaged. It does not matter to us whether our Stukas attack British ships in the North Sea or in the Mediterranean; the result is always the same. One thing is certain: Wherever Britain touches the Continent she will immediately have to reckon with us, and wherever British ships appear, our submarines will attack them until the hour of decision comes. Thus, except for Germany, only Italy has had a revolution which, in the long run, will lead, must lead and has led to the construction of a new national community.

We had to exercise patience for many a long year, and I can only say: My opponents may believe that they can terrify me with the threat of time, but I have learned to wait,

and I have never been idle while waiting. We had to wait ten years after 1923 until we at last came into power. But you old members of the Party know that we accomplished much in those ten years.... We were never in the habit of setting ourselves a limit and saying: This must be done on March 1, or June 15, or September 7....

These sharp-witted journalists who are now in England - they are no longer among us - knew all about it. Now they said: 'August 13 is the turning point; National Socialism is done for.' August 13 came - and National Socialism was not done for. A few months later they had to fix a new date. Finally came January 30, 1933. Then they said: 'Well, now they have made their mistake! They have gained power, and in six weeks they will be finished - three months at the most. Three months, and that will be the end of them.' The six weeks and the three months passed, and still we were not finished.

And so they kept on fixing new dates for our downfall, and now, in wartime, they are doing exactly the same thing. And why not? They are the same people, the same prophets, the same political diviners who prophesied the future so wonderfully when they were here. Now they are employed as assistants in the British Ministry of Information and the British Foreign Office. They always know exactly that on such and such a date the Germans will be finished. We have experienced that more than once. You all know what they said. I need only refer to the celebrated utterance of a great British statesman whom you in Munich know by sight - Mr. Chamberlain. A few days before April 9, of last year, he said: 'Thank God, he has missed the bus.' I can remind you of another - the British Commander-in-Chief - who said: 'A few months ago I was afraid, now I am afraid no longer. They have missed their opportunity. Besides, they only have young generals. That is their mistake and their misfortune; it is the same with all their leaders. They have lost their opportunity. It is all over.' A few weeks later this general had departed. Probably he, too, was too young.

Today they are doing exactly the same thing. They always fix final dates. In the autumn they said: 'If they don't land now, all is well. In the spring of 1941 Britain will transfer the offensive to the Continent.' I am still waiting for the British offensive. They have transferred the offensive elsewhere, and now, unfortunately, we must run after them wherever they happen to be. But we shall find them wherever they run. And we shall strike them where they are most vulnerable.

Thus, twenty-one years of a dauntless struggle for our Movement have passed. After thirteen years we at last came to power. Then came years of preparation of our foreign policy, of gigantic work at home. You know that it is all an exact repetition of what happened in the Party. We asked nothing of the world but equal rights, just as we asked for the same rights at home. At home we demanded the right to meet freely, the right which the others possessed. We demanded the right of free speech, the same right as a parliamentary party as the others held. We were refused and persecuted with terrorism. Nevertheless, we built up our organization and won the day....

Of course, a fundamental social principle was necessary to achieve this. It is today no longer possible to build up a state on a capitalistic basis. The peoples eventually begin to stir. The awakening of the peoples cannot be prevented by wars. On the contrary, war will only hasten it. Such states will be ruined by financial catastrophes which will destroy the foundations of their own former financial policy.

The gold standard will not emerge victorious from this war. Rather, the national economic systems will conquer. And these will carry on among themselves the trade that is necessary for them. . .

In this respect we can look to the future with confidence. Germany is an immense factor in world economy, not only as a producer but also as a consumer. We certainly have a great market for our goods. But we are not only seeking markets; we are also the greatest buyers. The Western world wants, on the one hand, to live upon its empires and, on the other hand, to export from its empires as well. That is impossible because in the long run the nations cannot carry on one-sided trade. They not only have to buy, but also have to sell. They can sell nothing to these empires. The peoples will therefore trade with us in the future, regardless of whether this happens to suit certain bankers or not. Therefore we will not establish our economic policy to suit the conceptions or desires of bankers in New York or London....

Our economic policy, I repeat, is determined solely by the interests of the German people. From this principle we shall never depart. If the rest of the world says: 'War,' I can only say: 'Very well. I do not want war, but no one, however peaceable, can live in peace if his neighbor intends to force a quarrel.'

I am not one of those who see such a war coming and start whining about it. I have said and done all that I could; I have made proposal after proposal to Britain; likewise to France. These proposals were always ridiculed - rejected with scorn. However, when I saw that the other side intended to fight, I naturally did that which as a National Socialist of the early days, I did once before: I forged a powerful weapon of defense. And, just as of old, I proclaimed that we should be not merely strong enough to stand the blows of others but strong enough to deal blows in return. I built up the German armed forces as a military instrument of State policy, so that if war were inevitable, these forces could deliver crushing blows.

Only a few days ago, an American general declared before an investigating committee in the House of Representatives that in 1936 Churchill had personally assured him, 'Germany is becoming too strong for us. She must be destroyed, and I will do everything in my power to bring about her destruction.'

A little later than 1936, I publicly issued a warning against this man and his activities for the first time. When I noticed that a certain British clique, incited by the Jews - who are, of course, the fellows who kindle the flames everywhere - was intentionally provoking war, I immediately made all preparations on my part to arm the nation. And you, my old Party comrades, know that when I speak it is not a mere matter of words, for I act accordingly. We worked like Titans. The armaments we have manufactured in the past few years are really the proudest achievement that the world has ever seen. If the rest of the world tells us: 'We are doing likewise now,' I can only reply: 'By all means do so, for I have already done it. But above all, don't tell me any of your tales. I am an expert, a specialist in rearmament. I know exactly what can be made from steel and what can be made of aluminum. I know what achievements can be expected of men and what cannot be expected. Your tales do not impress me in the least. I enlisted the strength of the whole German nation in good time to assist in our arming and, if necessary, I shall enlist that of half Europe. I am prepared for all impending conflicts and consequently face them calmly.' Let the others face them with equal calm.

I place my confidence in the best army in the world, in the best army which the German nation has ever possessed. It is numerically strong, it has the finest weapons and is better led than ever before. We have a body of young leaders who have not merely proved their worth in the present war but, I can well say, have covered themselves with glory. Wherever we look today, we see a bodyguard of chosen men to whom the German soldiers have been entrusted. They in their turn are the leaders of soldiers who are the best trained in the world, who are armed with the finest weapons on earth. Behind these soldiers and their leaders stands the German nation, the whole German people

In the midst of this people, forming its very core, is the National Socialist Movement which began its existence in this room twenty-one years ago, - this Movement, the like of which does not exist in the democratic countries, this Movement whose only pendant is fascism. Nation and Army, Party and State are today one indivisible whole. No power in the world can loosen what is so firmly welded together. Only fools can imagine that the year 1918 can be repeated.

We encountered the same ideas among our plutocrats at home. They, too, always hoped for internal disruption, dissolution, civil war of German against German. Exactly the same ideas are encountered today. They say: 'There will be a revolution in Germany in six weeks.' They do not know who is going to make the revolution. There are no revolutionaries among us. Thomas Mann and others like him went to England. Some have already left England for America, because England is too close to their revolution's future field of operations. They are establishing their headquarters far from their future field of battle. Nevertheless, they assert that the revolution will come. Who will make it? I do not know. How it will be made, I do not know either. All I know is that in Germany there can be, at the most, only a few fools who might think of revolution, and that they are all behind iron bars.

Then they said: 'Winter, General Winter is coming, and he will force Germany to her knees.' But, unfortunately, the German people are 'winter-proof.' German history has passed through I do not know how many tens of thousands of winters. We will get through this one, too.

Then they say: 'Starvation will come.' We are prepared against this, too. We know the humanitarian sentiments of our British opponents and so have made our preparations. I believe that starvation will reach them before it reaches us.

Then they said: 'Time is on our side.' But time is only on the side of those who work. No one has been harder at work than we. Of that I can assure them. In fact, all these vague hopes which they are building up are absolutely childish and ridiculous....

And so, in all due modesty, I have just one more thing to say to my opponents: I have taken up the challenge of many democratic adversaries and up to now I have always emerged the victor from the conflict. I do not believe that this struggle is being carried on under different conditions. That is to say, the relation of the forces involved is exactly the same as before. In any case I am grateful to Providence that this struggle, having become inevitable, broke out in my lifetime and at a time when I still feel young and vigorous. Just now I am feeling particularly vigorous. Spring is coming, the spring which we all welcome. The season is approaching in which one can measure forces. I know that, although they realize the terrible hardships of the struggle, millions of German soldiers are at this moment thinking exactly the same thing....

If fate should once more call us to the battlefield, the blessing of Providence will be with those who have merited it by years of hard work. When I compare myself and my opponents in other countries in the light of history, I do not fear the verdict on our respective mentalities. Who are these egoists? Each one of them merely defends the interests of his class. Behind them all stands either the Jew or their own moneybags. They are all nothing but money-grubbers, living on the profits of this war. No blessing can come of that. I oppose these people merely as the champion of my country. I am convinced that our struggle will in the future be blessed by Providence, as it has been blessed up to now.

When I first entered this hall twenty-one years ago, I was an unknown, nameless soldier. I had nothing behind me but my own conviction. During the twenty-one years since, a new world has been created. The road leading into the future will be easier than the road from February 24, 1920, to the present. I look to the future with fanatical confidence. The whole nation has answered the call. I know that when the command is given: 'Forward march!' Germany will march.