Samuelson’s Fables

August 27th, 2013 · 2 Comments · economy, financial coverage, journalism, role of government, tax policy

By Arthur Alpert

Henny Penny, hit by a stray acorn, assumed the sky was falling and raced around spreading hysteria in the barnyard.

It’s a folktale about a deluded fowl scaring the bejeebers out of the community. The obvious moral is, watch out for idiots flapping wings. Or jaws.

The Albuquerque Journal’s favorite economics reporter, Robert J. Samuelson writes fables, too, or one fable with variations. It’s a tall tale about Americans having to choose between taking care of geezers and children.

It’s balderdash. And the Journal loves publishing it. Here’s what I surmise is why:

The newspaper’s fundamental economic narrative is two-fold. First, free Corporate America of restraints. That’s the plutocrats’ Holy Grail and why they underwrite the “libertarian think tanks” whose essays Journal editors publish a lot.

Secondly, government exists to promote American corporations, fund their fundamental research and infrastructure. This expenditure of tax money (i.e., corporate welfare) is supposed to trickle down to the rest of us. Samuelson falls into this traditional pro-business conservative category.

He has, however, a specific role. He’s the magician’s scantily clad assistant, the pickpocket’s pal, distractor-in-chief.  He grabs your attention with a heart-wrenching dilemma (cosset old folks or advance the young) while somebody else grabs your wallet.

As in the Wall Street implosion of 2008.

This would not be a burning journalistic issue, of course, if the newspaper printed a range of economic theories and practices the way the N.Y. Times, Wall Street Journal, Washington Post and countless smaller newspapers do.

But Journal management employs editorials, opinions and the news to further management’s agenda wherever possible. So (as I indicated last time) while the editors slot a few dissenting opinions onto the Op Ed pages, they mostly omit, minimize or bury what contradicts its politics.

That’s why Robert Samuelson’s ever-flowing stream of syndicated fiction matters and why I’ll dissect it below, emphasizing the fantasy generational war last iterated in the Tuesday, August 6 Journal.

First let’s consider Samuelson.

I’ve called him an economist. My bad! For good or ill, he’s not. His Harvard B.A. is in government. He’s a veteran reporter and commentator on business and economics.

Secondly, and creditably, Samuelson is not a partisan pretending otherwise, unlike several of the Journal’s syndicated columnists. I’ve read he won’t vote for fear it will impair his impartiality.

Thirdly, and also praiseworthy, he’s a journalist, not a paid propagandist.

I find him likeable and believe he strives to educate and to be fair.

Sadly, however, he is “not given to self-analysis,” to borrow from Paul Krugman’s description of Louisiana Governor Bobby Jindal in an August 19 blog post.

Actually, with respect to Samuelson, that’s a big understatement. He’s blind to his basic assumptions. This makes thinking difficult, leading to strange omissions and conclusions and frequent forays into blind alleys.

Samuelson brings to mind Josh Billings’ wisdom, “The trouble ain’t what people don’t know, it’s what they know that ain’t so.”

In the August 6 fable headlined “Favoring the past over the future”, Mr. Samuelson warns that Detroit’s bankruptcy is not an isolated case. “State and local governments face a prolonged squeeze between costly commitments to retirees and demands for better services.” He assumes that’s why the city is broke.

That’s why it’s behind the 8-ball, but not why it’s broke.

Samuelson never asks about or deals with Detroit’s history. Motown’s auto aristocrats trashed their own industry and then moved away, clobbering the one-industry town. Citizens who could move to the suburbs did, leaving the city with expenses but no income.

Conversely, Nobel Prize winning economist Joseph Stiglitz riffed on “economic segregation” in an essay the N.Y. Times published August 11 and the Journal did not.

“Lacking regional political unity,” Stiglitz explained, “there is no overall structure to improve the infrastructure and public services between poorer inner cities and affluent suburbs.”

Stiglitz dealt, too, with the national decision to let the financial sector metastasize (my cancer terminology) to the detriment of manufacturing and other industries.

Not Samuelson, which freed him to blame Detroit’s crisis on the workers and to rue the necessity of breaking their contracts.

But let’s get to the heart of Samuelson’s fable. “The scramble for scarce resources is intensifying. Schools compete with nursing homes,” he writes.

“Scarce resources” means “Revenue growth is slowing.” Fine, but Samuelson treats the phenomenon like a fact of nature, immutable.

Baloney.

Political decisions speed or slow revenue growth.

Wall Street’s 2008 implosion slowed revenue growth.

Growing income inequality over the past 35 years has slowed revenue growth.

The historic and massive redistribution of income upward from most Americans to the very wealthy over the past 30 years clobbered the economy. Cutting the tax rates of the super-rich made the super-rich richer and cut Treasury’s revenues even as it didn’t goose the economy.

(See the tax policies of George W. Bush, Bill Richardson and Susanna Martinez.)

Cutting taxes on the super-rich did, however, contribute to the Wall Street implosion of 2008, which deprived the middle-class of income. Savings and paychecks vaporized. And middle class consumers could no longer bench press the economy.

“Our economy runs on spending and consumption, not savings and production,” wrote Al Lewis in the Wall Street Journal Sunday insert the Albuquerque Journal carried August 25. “But credit card debt has been coming down since the financial crisis of 2008, and a dearth of consumer spending is choking retailers.”

(Irony alert! The Albuquerque Journal never publishes such commonsense except when it appears in syndicated WSJ pages. Guess the editors grin and bear it.)

I’m going on about this because neither Samuelson nor the Journal ever does.

Neither explains how the increasingly regressive tax system hurts the economy, how deregulation advantaged corporations (transnationals, especially) and wealthy individuals or how “free trade” – promoted by corporate Democrats and Republicans – enabled manufacturers to export facilities and jobs.

Neither Samuelson nor the Journal remembers that when productivity (the real source of workers’ gains, say the economists) soared, the rewards accrued to corporate bottom lines, not workers’ paychecks. Real wages stagnated or fell.

Neither has noted the effect of political changes, either. The Reagan Revolution was a counter-revolution. The oligarchs retook government from the Axis of Evil (New Deal, Fair Deal and Great Society). And the Supreme Court’s corporate majority has just re-empowered the plutocracy while discouraging poor people from voting.

Which might explain why corporate welfare persists and investment in the middle-class sags.

Samuelson’s failure to deal with any of that strikes me as innocent; he may believe economics is a science and separable from politics.

He’s also blind to the idea that folks with jobs, education, improved Social Security and Medicare will have the wherewithal to buy products and services, thereby promoting production and hiring.

Consider his “Health care holding up economy” column in the August 23 Journal, on the economy’s overall sluggishness.

“If you’re a corporate executive or a small business owner,” he writes, “you haven’t had much reason to hire or invest because – in many industries – there’s been no net growth in more than five years.”

Wonderful. Business is sluggish because it’s sluggish.

He goes on to cite evidence for that in industrial production, vehicle sales, air travel and home sales, but doesn’t (can’t?) take the next step.

Please, Robert, repeat after me. “Business remains sluggish because there’s inadequate demand.”

There, was that so hard?

Moving right along, Samuelson’s “Schools compete with nursing homes” fable assumes – incredibly – there’s nothing else we spend on.

Does he not know we spend trillions elsewhere and often wastefully?

Schools and nursing homes compete with wars.

With war preparation, too, as in aircraft, bombs and tanks as well as the nuclear triad. The conservative Pete Petersen Foundation reports the US spent $682 billion on defense last year, more than the next 10 or 12 defense-minded nations combined, depending on your arithmetic.

And of course, schools and nursing homes also compete with tax cuts for the most affluent, which (since they don’t foster economic activity) is waste.

In sum, Samuelson’s idea that we must choose between cutting Social Security, Medicare and Medicaid, on one hand, and schools, on the other, doesn’t hold water. And each time he retails it, he resembles Henny Penny.

Perhaps his problem is depression; the illness, I mean, not what happens to the economy when laissez-faire fanatics take charge. Samuelson does worry a lot about “weakening tax bases ” and the prospect of “lower economic growth and inflation” and those “finite resources.”

Yes, “lower economic growth” may be in the cards if we continue to pursue austerity, but he doesn’t chastise Washington for failing to invest in this era of slow growth.

As for inflation, he, the supply-siders and other imaginative prognosticators have warned it’s right around the corner for several years now.

No doubt they’ll be right some day.

Incapable of questioning the assumptions undergirding his fantasy war, Samuelson insists on it.

“It’s literally schools versus nursing homes,” he writes.

Or perhaps, he’s just loyal to the fable he’s written so often and which the Journal publishes so often, even while it finds no space for a wide range of economic reporting and opinion. I don’t know.

I do know the editors’ embrace of Samuelson’s fiction means I got it wrong, that story about a deluded fowl racing around the barnyard spreading mass hysteria.

I figured the point was, “Watch out for ignoramuses flapping their jaws!”

But for Journal management, ill-informed, hysterical Henny Penny is a role model.

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2 Comments so far ↓

  • Emanuele Corso

    “Mass hysteria” is not all those deluded fowls are spreading around the neighborhood, Arthur. There is a huge and well coordinated propaganda machine in support of the fiction that cuts must be made to education and health care. This guy, Samuelson, is just one of those spreading that stuff around the barnyard.

  • Cheryl Everett

    Arthur Alpert is so great at debunking the Journal’s myths with intelligent and powerful editorials and op-eds of his own. This is one of the best I’ve seen.

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