Lies the Wall Street Journal Told You

I’m not going to delve into all of the right wing ideology espoused on the Wall Street Journal’s editorial page, their free market blather and extensive apologia for President Bush, which not even a misguided war and a failing economy could discourage. It’s like arguing against the Detroit Lions. The abysmal judgment of the Journal’s editorial staff is there in black and white and doesn’t even need to be debated. But let me point out one thing: can you imagine the panic right now if the country had listened to these guys and privatized Social Security?

Actually, I’m not even here to rail against the Wall Street Journal, per se, but at the business media in general and in their seemingly uncanny ability to be wrong about almost everything. Here are a few generally unrefuted pearls of wisdom that have been floating around during the recent financial crisis, ideas that are at least misguided, if not outright lies:

1) The U.S. consumer matters: Once upon a time, the U.S. consumer was the engine that fueled world economic growth, but that is no longer the case. Over half the planet is rapidly growing, or at least it was until a couple of months ago, and the people in these countries have a voracious demand for all the good things that we take for granted. Demand growth is the mother’s milk of capitalism. The biggest problem with the current banking crisis is not what it has done to the U.S. consumer, or even how it has saddled the banking system with bad debt, it is how the crisis has cut off the spigot of financing that had been fueling rapid growth around a host of developing countries, from India to Russia to Brazil. The sooner these folks can resume expanding their economies, the sooner things will get better for the rest of us.

2) Giving the American people a rebate check is a good way to stimulate the economy: Does anyone remember what most folks did with last spring’s rebate checks? Sure, people saved some of it, which for some reason is supposed to be bad. But what they did with most of the money was a whole lot worse. Tens of millions of Americans went out to some big box retailer and spent their rebate checks on cheap plastic crap from China, hurting our balance of trade payments but doing almost nothing for our economy. This time around, the U.S. government might as well buy all of that plastic crap directly from the Chinese at wholesale and then open up warehouses to disperse it directly to the public, like we used to do with government cheese. I figure that the actual cost from the Chinese manufacturers must be pennies on the dollar, thereby saving our kids and grandkids, who will end up paying for this scheme, tens of billions.

3) Investing in infrastructure will not help us today: It takes awhile for new projects to get started, the theory goes, thus limiting the impact of infrastructure spending as a stimulus. But one of the first rules of trading is to “buy the rumor and sell the fact.” So the market tends to move in anticipation of an event, not from the event itself. The “smart money” will be looking forward to the long-term boost that infrastructure spending will bring, a slow burn that should, if nothing else, limit the pace of any market slide. Meanwhile, a host of businesses will begin looking to take advantage of all those freshly paved roads, the new mass transit, and the growing alternative energy industry.

4) U.S. heavy industry does not matter: All those expanding economies in the developing world are full of people looking to buy their first car, their first refrigerator. For most of the planet, what the U.S. media refers to as “old industry” is new to them. There are plenty of American companies that can step in to meet this new demand, and this should be a cornerstone of the coming economic rebound.

5) The U.S. computer industry has a bright future: We all have computers, and we all know how often they break down, ranging from program glitches and overheated batteries to the dreaded blue screen of death, but for some reason the computer industry gets a free ride in the media. The reality is that most American computer manufacturers make an undependable product, and most American software companies aren’t much better. It’s only a matter of time until the Japanese, the Koreans, or the Finns learn how to kick our ass at this, too.

6) Corporate consolidation is a good thing: Now that we’ve bailed out the major American financial institutions to the tune of $350 billion and counting, the talk is about how the financial industry is too diffuse and needs to “consolidate”. But the questions are: why is it too big, and who is going to do the consolidating? Because the corporations that are most likely to be in the buying mode, such as Citigroup, or Bank of America, or Goldman Sachs, were key players in the recent financial collapse, while many of the smaller regional banks kept their heads down and were just busy doing their job. In this context, “too big to fail” is a crazy concept. Rather than giving the large banks hundreds of billions to swallow up everyone else, the government should be breaking these banks into their constituent parts, returning the American banking system to the patchwork of regional banks concerned with servicing their local communities, which is the way things used to be before the banking deregulation of the 1980’s.

Oh, and BTW, Happy Thanksgiving.

Who To Fear

I’ve been reluctant to discuss last week’s Presidential election, mostly because my guy won, and I think it would be rude to gloat. But it remains on my mind. Here are a few observations:

Obama has been compared to a lot of predecessors, from Abraham Lincoln and John F. Kennedy to Adlai Stevenson. But my own comparison is with another Illinois politician, namely John Anderson, who ran first as a moderate Republican and then as a 3rd party candidate for President back in 1980, eventually garnering a little under 7% of the vote. For a time, Anderson had a grassroots, charismatic appeal, much like Obama, garnering a lot of attention for his “fresh”, non-partisan approach to politics, and Anderson was the darling of political cliques in college campuses around the country. I was living in UCLA’s Sproul Hall in 1980 and witnessed more than one Anderson rally, and the do-gooder unctuousness of these folks really turned my off. I have the feeling that I would have felt the same way about Barack Obama if I was on a college campus today.

In fact, I didn’t care for any of the three major candidates in 1980 and ended up voting for Ed Clark, the Libertarian, back when many Libertarians were actually progressive on social issues. Clark campaigned on a platform of reduced military engagement and “low tax liberalism” (the frightening pro-America, anti-rights folks, a la Bob Barr, didn’t gain a stranglehold on the Libertarian Party until the late 80’s.) Clark ended up getting a little over 1% of the vote, the best nationwide performance for a Libertarian Presidential candidate to date.

Another thought about the recent election originated from my wife, Melissa. A guy we know here in Chicago had been an enthusiastic Obama supporter from early on. When his Brooklyn-based sister-in-law would fret about “the herd that went for Bush” also going moving en masse against Obama, he would, having been raised in Ohio, come to the defense of the mass of middle Americans, saying that “sometimes, you just have to trust the people.” When this debate was reprised after the election, Melissa responded, “They’re just another herd, it’s just that this herd voted for our guy.” Well put.

With two or three possible exceptions, just about everyone in my circle of friends voted for Obama. But the same cannot be said for my in-laws. I’m not exactly sure, but my guess is that there were 2 votes for McCain, 5 for Nader, and 1 for Bob Barr. To the best of my knowledge, the only folks in her immediate family who voted for Obama were Melissa and I. Anyone who has read this site knows that I don’t think much of Bush, McCain, Palin, or just about any of the current crop of Republicans. But I’ve come to the conclusion that, despite the fact that George W. may have set this country back a generation, Republicans are an essentially manageable threat to our democracy. The same cannot be said for Ralph Nader.

There is nothing more dangerous than an idealist, particularly one that dreams of attaining power. When you hear a political leader promise “Peace, Land, and Brotherhood” or call for “A Campaign of One Hundred Flowers,” it is a clear signal to collectively kill that movement by any means necessary, because by the time you realize that they mean to take away the life and liberty of all who oppose them, it will do no good to grab your gun and run for the hills.

Nader’s bloodlust, his preoccupation with “arresting the executive crooks” in corporate America, in fact his desire to eliminate any rights of “corporate personhood,” a path whose logical end is that anyone who opens a business would be subject to the confiscation of his personal property by the legal system, reminds me of nothing so much as the rantings of the Khmer Rouge against the business class of their own country, to whom they proffered the slogan, “To keep you is no benefit; to destroy you is no loss.” As we subsequently found out, Pol Pot meant that quite literally. History has repeatedly demonstrated that when a political leader threatens to spill blood in the name of his cause you should take him at his word.

I admit, I first grew to hate Ralph Nader as a child. Our neighbor, who we called Uncle Bob, was a real car buff, and at one point he drove a Chevy Corvair. He would talk about the mechanical wonders of that car, and how it was a tragedy that it was railroaded out of existence by Mr. Nader, who Uncle Bob referred to as “a real Bozo.” I may have been a child at the time, but even then I hated the tearing down of something beautiful for personal notoriety or out of some oversized notion of justice, and, as it turns out, Uncle Bob was actually right, as the Corvair was eventually tested and found not to have most of the structural flaws that Nader alleged. But it was too late for the vehicle, whose sales had already plummeted

But it is one thing to cripple a car brand and entirely another to cripple your country. Nader had to know that his presence on the ballot in 2000 could tip the balance to George Bush in a close election, and, as it turned out, it did, as Al Gore would almost assuredly have won the state of Florida, and thus the election, if Nader’s name were not on the ballot. Now, I was never a big fan of Al Gore. I didn’t vote for him in the Democratic primary, and I don’t care for him now. He and his hollow blond wife are such typical Baby Boomers, with their smug presumption that they are at the cutting edge of everything interesting and cool, when actually they are two of the dullest fucks on the planet. However, I had the common sense to see that, while Al Gore was personally repugnant, George W. was a national calamity in waiting.

For some reason, Nader never realized this. In fact, years later, he claimed that the election of George W. Bush was essentially no different than a Gore Presidency would have been. Tell that to the 5,000 dead and 50,000 maimed U.S. soldiers in Iraq, or to our children and grandchildren, who will be paying off the budget deficits engendered by the Bush Administration for decades. Nader never did exactly admit he was wrong about Bush not being any worse than Gore, although he did eventually change his tack, claiming that it was actually Al Gore’s fault for not having the competency to win that election by enough votes so that Nader’s impact wouldn’t have mattered. Like I said, if there’s one thing that people need to fear, it is an idealist with no shame.

Admittedly, Nader has become a harmless, irrelevant force in our country. But our collective goal should be to keep it that way and to actively oppress the ability of others like him to spread their virus to, as Melissa calls them, “the herd”, or in more polite terms, the general public, because if history has taught us anything, it’s that we are a bloodthirsty species, easily cowed.