Nonsense from the New York Times: David Leonhardt Edition

The nonsense coming out of economics writers each day is downright numbing and David Leonhardt provides us with a sadly typical example in today’s New York Times.

As the “Economic Scene Columnist”, he writes that the recession and high unemployment is due to “the fizzling of the great consumer bubble that was decades in the making”.  “The old consumer economy is gone, and it’s not coming back” as it “depended on income people didn’t have”.  We need to move instead to an “investment and production economy, with rising exports, expanding factories and more good-paying service jobs”.

But if the consumer economy is not coming back, for whom will the investment and expanding factories serve?  He doesn’t say but his call for rising exports implies that our hopes are in producing for Asian consumption.  That’s a non-starter in the real world, though, since to use his own words, it depends on income people don’t have.  The average Chinese worker makes pennies on the hour and is not capable of importing very much even if US wages dropped to similar levels.  And what of Asian jobs if the US suddenly became the producer?  There’d be even less income to buy the exports.

Leonhardt is a purveyor of an elite consensus that reminds one of the fairy tale king without clothes.  The elite narrative seeks to impose severe restraints on living standards that lack any material necessity.  We clearly have the ability to produce far more goods and services than are desired, yet we are told we must live with less.  Leonhardt confuses unreal, man-made financial constraints with real technological limitations.  On what basis can he claim consumer spending over the past decades was unsustainable?  It surely wasn’t in a real way: we actually produced those goods and services didn’t we?  Leonhardt unreflectively accepts the tired right wing orthodoxy that the consumption was unsustainable because it was based on income people didn’t have.  Since we clearly had the material resources to quite easily produce what we did, the real issue becomes easily identifiable: it’s a problem of how purchasing power, i.e. income, is distributed.  And the problem can therefore only be solved by instituting far greater income equality coupled with some degree of monetary creation.

The problem we’re in today goes to the very roots of our socio-economic system and to solve it we must not only understand the great issues involved but be willing to take on the tremendous power interests that are, in fact, the heart of the problem.  Should we laugh when we read Leonhardt’s utterly lame, trivial, and insulting proposal?

A more promising approach could instead offer a tax cut to businesses — but only to those expanding their payrolls and, in the process, helping to solve the jobs crisis. Along similar lines, a budget deal could increase funding for medical research and clean energy by even more than President Obama has suggested. These are the kinds of investments that have brought huge returns in the past — think of the Internet, a Defense Department creation — and whose price tags are tiny compared to, say, Medicare or the Bush tax cuts.

The mainstream media, along with the mainstream economics profession and the two political parties, are institutionally incapable of addressing root issues.  If it weren’t Leonhardt providing us with nonsense propaganda, it would be somebody else.  The great challenge is how to get the wider public to recognize the extent of the fraud.