Journalists love a good story, right? Just love one. Love the competition. Love a good race, especially in politics. Yes, there’s nothing like conflict — that’s the bread and butter of modern-day journalism. What media bias?
The last month disproves this fantasy. The relentless hunger of the mainstream media to run Hillary Clinton out of the race is palpable — even though there exists a real possibility of a battle that will continue all the way to the Democratic convention in August. What’s more, this battle is generating excitement and ratings, with MSNBC crowing about the 8 million plus viewers it got for last week’s Obama-Clinton debate. That’s ten to fifteen times its ordinary rating on a weekday night.
The great story would be — Hillary stays in. She’s tough. Obama feels the heat. Neither one of them has it nailed down. The superdelegates are up for grabs. It’s a fight for every last superdelegate.
But that’s not what’s happening. Instead, you will see, tomorrow and for the rest of the week, no matter what happens tonight, a constant drumbeat that Hillary must drop out. Politicians will be sought to deliver this message. Talking heads will talk themselves hoarse on MSNBC and others. Op-eds will be drafted on the nobility Hillary will show by giving way to Obama. And so on.
The night Obama slaughtered Hillary in Iowa, and delivered that brilliant stemwinder, media liberal hearts were lost to him forever. They want her gone because they want him. Oh, how they want him. And how they will fight, fiercely, the notion that it will be good for them that there be a hot race between Obama and John McCain. They won’t want that race. They want a coronation.
“And there won’t be a healthy economy until there is wrenching change.”
You need to mention that the wrenching change in economics may cause a wrenching change in our political system. What would be the likely political result of mass unemployment? However, we know that a large scale war may be the cure for what ails us,as mentioned above. My guess is WW3 trumps Great Depression2.
RCAR, you raise a critical issue.
I don’t foresee a change in our political system. I do see a change in China’s and maybe Russia’s, however. And WWIII? I don’t think so. Yet I do believe there will be global trade wars.
One hopes that Obama will have a good enough grasp of grammar to tell Michelle he “shrank” the economy.
Is Friedman’s answer to everything “blame the US”? Why is this man given a crayon? If we wish to get down to the nuts and bolts of the near credit meltdown and continuing credit crisis; we must look in the mirror. Yes, the idiotic policies of Carter are still happily munching away on our collective backside. Yes, the Clinton admin’s policy of expanding the program was key to the explosion. Yes, the use of legal action, threats/intimidation by ACORN and their allies bullied banks into giving bad loans or face prosecution. But at the end of the day, we elected Carter and Clinton, who originated the programs and appointed graft masters like Howell Raines, Jaimey Gorelick and Jim Johnson and the people of MA/CA/CT keep inflicting criminally stupid representatives Barney Frank, Maxine Waters and Chris Dodd on us. Enough of the electorate needs to proclaim “I’m mad as hell and I’m not going to take it anymore” with apologies to Albert Finney. Despite what San Fran Nan says; there is not nor likely to be in the future a free loan or lunch. Stop acting like actions have no consequences!
Pedant von knowitall, okay, but the reference is to the movie.
A millenium from now archeologists digging where the NYT building now stands will find floppy discs or CDs with Friedman columns on them and place them in the same bin with Dave Barry. He’ll be described as having a “wry sense of humor and a talent for constructing alternative realities of the absurd”.
Scott, you wrote, “Stop acting like actions have no consequences!” Yes. Every member of Congress needs to heed your injunction. In economics, everything is connected, and doing one thing will affect another.
Why anyone still takes Friedman seriously is beyond me.
George Bush and the Republicans shrunk the economy and WSJ poll shows 94% of Americans know it.
The wrenching change to come is the demise of the US dollar as the world reserve currency. Change that I can believe in!
I don’t think this economic analysis is correct. Single-sector bubbles can of course lead to overinvestment in a particular sector that needs to be pared back. And an overstimulated economy can misallocate resources in unproductive ways that need reajustment. But I know of no circumstance in which the world’s economy as a whole needs to cut back on production of goods and services. Letting productive capacity go idle only makes sense if there is some more efficient use for it that requires some kind of conversion overhead–never because the world is somehow better off without its output.
The real problem today, in any event, is not “overproduction”, but rather overborrowing. In other words, the world’s asset-holders together believe they have a total claim on the world’s future production that’s greater than the world can actually cover, and some investors will therefore inevitably be disappointed. Unfortunately, until it’s settled exactly who will lose how much in assets in order to bring total claims in line with future production, asset-holders are scrambling to find safe havens that will protect them from this reckoning. To put it another way, the world is insolvent, and in the absence of an official liquidator, creditors are refusing to throw good money after bad, and are instead hiding their money in their mattresses.
What the new administration needs to do (and what the previous administration has already started doing, in a somewhat disorganized way) is play the role of bankruptcy judge, and apportion the creditors’ losses in an orderly, reasonable, fair and predictable way. Once this happens, there’s no reason why the productive elements of the world’s economy–that is, the vast majority of them–can’t continue functioning under reorganization, purged of their unrepayable debt. Some enterprises will of course turn out to be unproductive, and require liquidation. But a wholesale contraction of economic activity is simply unwarranted.
Chuck Martel and Rob Dawson, we take Friedman seriously because he has a wide audience. I know he shouldn’t, but in fact he does.
Dan Simon, thanks for the analysis. We would all be better off if there were enough demand for all the world’s factories, but that is not the case. Whether its overborrowing or overproduction, there is simply much too much capacity as this moment, and it will take years for consumers to get back to consuming at the levels of a year ago. Soon, the situation will be worse because Chinese consumers, often considered the world’s next best hope, are also starting to cut back.
Yes, Friedman does have something of a wide audience. But the “American street” doesn’t pay much attention to him. They are listening to and looking at Oprah Winfrey, Barbara Walters, Katy Couric, Chris Mathews, Campbell Brown and other television deities. In numerical terms, he isn’t nearly as influential as they are.
Gordon, you are talking about “demand” as if it is independent of…supply.Why? This is the language of the statists throughout the last 80 years and it is a failure. What will it take to make national income grow;it sure isn’t rebates to put money in consumers pockets.So, once again, it’s the incentives to take risk and and produce that are badly needed.Money velocity fell off a cliff in October but is rebounding, but until you can get fiscal policy that encourages growth, the US will stumble along.
Demand is never the problem.Consumption is a given;it is production that is taken for granted.Tom Friedman will never grasp that, or he would have been a Republican.
soupcon, you wrote: “So, once again, it’s the incentives to take risk and and produce that are badly needed.” I couldn’t agree more with this statement. Thank you.
The economy will not turn around until citizens and businesses have confidence that things are going to get better. Confidence does not come from a temporary tax cut or a temporary make-work job, when Congress promises to raise your taxes just as soon as they can.
Confidence comes from permanent things like lower taxes (making the Bush tax cuts permanent, lower estate tax, lower corporate taxes ) because to turn the economy around they have to have confidence that the money they spend over and above the basics, the investments they make, the people they hire, the business chances they take have a reasonable expectation of being rewarding.
WWII meant that the other half of the population that was not in the military went to work at price controlled jobs. When things turned around was when it was over, and folks needed new refrigerators, new sets of cookware, new cars, nylons — everything they’d done without for years, and the former defense plants started producing them. We had a huge deficit in 1945.
Thomas Friedman is notorious for coming up with ridicous schemes that seem to have no foot hold in reality.
Put this next to the idea about getting the “Big 3″ auto companies to make the cars that people want. With sales of SUVs once again outpacing sedans, it’s obvious that they are making the cars that people want, it’s just that most people have been put into a “Panic” over the current economic situation and just don’t want to go out on a limb for anything as large as a automobile purchase. Perhaps on this front Obama should stop trying to “talk down the economy.”
MacBurney, you wrote: “When things turned around was when it was over, and folks needed new refrigerators, new sets of cookware, new cars, nylons — everything they’d done without for years, and the former defense plants started producing them.” Yes, that’s a better point than the one I made.
Neo, maybe Obama should not have talked down the economy in recent days, but he is certainly right to forecast a long, hard recovery.
Chuck M
The “American street” doesn’t pay much attention to Friedman.
Wish I’d said that.
This is a guy who made his bank by marrying a mall heiress and then wrote a book about how US consumers are environmentally destroying the world.
How freaking hypocritical do you have to be before the NY Times takes away your ‘wide audience’?
Gordon,
Let me amplify your post in two directions. Theoretically, I think that before looking Michelle in the eye, saying, “I shrunk the economy,” the new President has got to show the guts to make the following announcements:
1) To Americans who are going to be affected by the shrinkage – “Hey guys, I’ve decided to let businesses dump as many workers as they like because now I’m in a position to save our country first. So, you better be prepared to go jobless, homeless, coverless and helpless. I assure you that you’re gonna see a double-digit jobless rate very soon.”
2) To Clinton and Gates – “I’m gonna shrink U.S. military and diplomatic presence abroad, as well, because we can’t afford your multilateralism anymore, just like we couldn’t afford Bush’s unilateralism. For one thing, forget about your ‘cornerstone’ stuff about our Asia policy.”
People will get mad, but it can’t be helped.
Economic arguments are interesting and everyone is a prognosticator, simply because economics indeed is a dismal science. But I think everyone can agree that the above analysis is very simplistic about needing to shrink the economy for the economy’s good. It’s reminiscent of Bush’s statement that in order to save the free market, we had to surrender free market principles. Making declarative statements like these does not invalidate all other courses of action that would defy these draconian notions for fixing the global economy. Naturally because of the business cycle, free market economies experience ebbs and flows, due to difficulty in sustaining profits. Excesses result when the difficulty in sustaining profits requires more and more risk to be taken, in the absence of new ideas and products, to produce higher and higher profits. The result is almost always some type of bubble eventually due to the use of leverage to create these higher profit levels. When the bubble bursts, i.e. when profits can no longer cover leverage costs, we have a recession to purge the system of old ideas, practices, and businesses. Out of this destruction, or abandonment of old practices, are new practices, ideas, and businesses and thus another cycle of growth and profits. The government’s role is to ease the pain of the purges as much as possible without precluding the emergence of new ideas, practices and businesses. This is what needs to be focused on when looking at this “crisis.” Is the government better off easing the pain of this recession by cutting taxes and lowering interest rates, or should the government prop up the failing enterprises from the previous cycle? If you retain the enterprises that were at the heart of the last cycle’s failures, you don’t leave that cycle behind and allow for new enterprises to arise. My opinion is that we need an orderly way to permit these firms, like GM, AIG, and Citigroup to fail in a way that doesn’t imperil everything. I believe as long as there are viable competitive firms in the same marketplace as these ailing firms, then those firms can be allow to fail without substantial risk to the whole economic system.
Now I say all this without commenting on the distorting effects of government participation in the economic system. Government should be at most a consumer of goods and services (though the effect of this consumption has the cost of taxation and inflation), but not an active participant in delivering goods and service, nor in mandating political outcomes in the private marketplace. Neither should the government engage in choosing winners or losers, especially by determining who survives based on political connections (example Chrysler). Finally it would always be best if government, who creates the economic environment, makes that environment as inviting to business and enterprise growth as possible, with less onerous regulations, lower taxes, and sound money.
So basically, the global economy needs to decide what it wants. If the global economy wants growth and freedom, then it has to stick with capitalism accompanied with the business cycle. It must recognize what causes the business cycle and adopt policies that will mitigate the pain of the inevitable decline in that cycle. In the future, a sophisticated understanding/approach to the business cycle will limit declines in business activity to particular sectors without imperiling the entire economy. This could have occurred with this latest “crisis” if the appropriate steps were taken to allow ailing firms such as Bear Sterns to fail without any explicit government backing of bad business practices. The good news is hindsight is 20/20 and this will make us better in tackling the next crisis, so long as our commitment is to free market capitalism. If the global economy doesn’t want capitalism, then it must determine the extent that it wants government to participate in the economy and consider the consequences of government participation beyond what it is presently. In every instance in which government was given the primary role in generating economic activity we have seen failure and unsustainable excesses, as was seen in Europe and the Soviet Union. The culprit in those excesses was the impossible ability of government seeking to solve all problems by creating bureaucracies to address those problems. Of course we know bureaucracies are rife with waste and inefficiency and therefore eventually cause widespread degradation in the quality of good and services. The pain of the reforms that have to be made to overcome those problems make the issues with free market seem like a massage from a Nordic masseuse.
In the end we don’t have to reduce the size of the global economy, more than we must recognize the type of economy we have. If it is free market capitalism, we will have business cycles that require policymakers to think of ways of isolating sector downturns so that they don’t spillover into all sectors. Government should stop being impediments to growth because of short-term political considerations and the temptation to aggrandize government power. Sound money, reliable energy, sensible regulation, and low taxation will create an environment that will ensure the success of capitalism and the success of us all.
YY, instead of bailing out industrial enterprises, Obama can increase unemployment benefits. They should not be indefinite, but they can be lengthened.
There is still a need for the United States to preserve order abroad. If we don’t spend the money now, we will spend more in conflicts later. History rarely provides clear lessons, but that is one of them from the last century.
Steven, I agree with what you say and thank you for your fine analysis.
Obama should tell Michelle, “Honey, I let the economy shrink.” That is what I meant anyway.
Gordon,
I think you have a good point. Yet I’m not fully convinced.
1) Maybe you have overlooked the human nature. Many European countries have had bitter experience with “From the Cradle to the Grave” stuff, whether or not they have learned their lessons. Being a lazy person myself, I would opt to live on welfare until a high-paying and toilless job offer visits my doorstep, if I could count on the government for handsome benefits. Recently I looked into what I’ve given to and what I’m receiving from the national pension plan. Needless to say, I learned anew that I better forget about capital and income gains to have been earned on pension premiums I was contributing for 45 years. But what is not needless to say is that I learned to my dismay that I will have to stay alive until I turn 90 if I want to fully recover the principal part of the premiums. A guy at the Social Insurance Agency said it can’t be helped because I have been in a position to help needier people who can’t afford to pay their own pension dues. According to him, redistribution of income is what these entitlement programs are all about. I doubt that the American people will readily become used to this idea. And that is why I still believe in their resilience.
2) As to U.S. foreign policy, I think it still remains unadjusted to post-Cold War era and as a result, it’s been way overstretched. I’m saying it should shrink drastically, but very methodically, so that the State and Defense Departments can reprioritize the regions where the new priorities should really be placed. One should not take it for granted that the alliance with Japan, which dates back to the post-WWII days, will function as the “cornerstone” of U.S. Asia policy until “death do us part.”
Let me add something to my previous post.
When Clinton mentioned the U.S.-Japan alliance as the cornerstone last week, most Japanese became really exhilarated. But some, including myself, saw an unmistakable sign of mental laziness in the Secretary of State-designate who thinks foreign policy should be treated as a sacred cow. Worse, this indicates that she is not a multilateralist that she claims to be. She is actually a unilateralist because she still views the 49-year-old security treaty solely from the U.S. point of view. If she really believed in multilateralism, she should have given some thought to this question: “Will it also serve Japan’s interest?” Perhaps, her answer was, “Who cares?”
YY, Japan derives substantial benefit from the treay. Many–and not just Americans–think that Japan reaps most of the benefit. It gets the use of the world’s most powerful military for relatively little cost. Remember, Japan lives in an extremely unfriendly neighborhood. Russia, China, North Korea. Who could ask for more dangerous potential enemies?
YY@28,
“The country I dislike the most in terms of U.S.-Japan ties is Japan, because it’s a country that can’t assert itself” Although not a fan of Shintaro Ishihara at all but I have to say he correctly point out the nature of security treaty and the overall US-Japan relationship.
Gordon,
You make an excellent point that banks aren’t lending because they don’t want to make bad loans.
The question then is why new loans would be bad loans. The obvious answer is that household net worth just declined by $6 trillion. People are poorer and therefore less creditworthy.
To that you can add rising unemployment, incomes that are flat to down, and a huge overhang of pending foreclosures and personal bankrupticies.
Yet, while people are poorer, government continues to grow and taxes are going up. Your house may be worth less but your property tax is higher. You didn’t get a raise, but the governor of New York has 137(!) new taxes for you to pay. And so on.
It is delusional to think this can continue and yet Obama (and just about everyone else) proposes to go on an unprecedented spending spree.
Until we get leaders who can say, “Honey I shrunk the goverment, ” it would appear that we are in an economic death sprial.
JLiu,
Just for your info: Ishihara has become an ardent China fan since he attended the August 8 ceremony. That will last until the IOC decides the venue of the 2016 Olympics
Gordon,
Many thanks for clarifying your point once again.
True, Japan is situated in one of the most dangerous neighborhoods. But still I don’t see why people automatically draw the conclusion from this that the world’s No. 2 economic powerhouse needs protection, and it should come from the U.S.
As to what I think is Clinton’s version of unilateralism, I just wanted to say her claim to be multilateralist is wrong, if these words still means something. Every country has the right to act solely on a country-first basis, or even to say, “Sorry, we made a mistake,” in a later point in time. I think the current situation really warrants that the U.S. exercise this right. I wonder why America is poised to keep playing the role of the benevolent Uncle Sam. It’s not the right thing for the U.S. to provide its Far Eastern “ally” with its nuclear umbrella amid the downpour.
But let’s leave it there for now.
petipace, thanks for injecting some much-needed wisdom here.
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