The Corner

more dobbs e-mail debunking


Rich, The email you posted is from someone who doesn’t know anything about economics and who almost certainly lives in Michigan – that beautiful state that brought us the one-state depression.  And the chances of the emailer owning at least one Lyndon LaRouche book are 2:1. 

Let me hit his points one by one: 

1.       Unemployment – A mysterious addition in March?  Numbers are revised every month by the BLS.  In some months they revise lower. The answer to his question is that the employer survey was catching up with the household survey which has been a better measure of job creation during this expansion.

2.       National Debt – Yes, the government takes and spends too much.  Yes, the prescription drug bill is a timebomb, but the debt scare is and always has been unfounded. 

3.       Record Trade Deficits – Snore.  Another hollow old chestnut.  So what?  We’re buying more, better, faster, cheaper goods? Great!  And the meme on manufacturing jobs is getting threadbare too.  This country is produced 7.9MM vehicles in 1960 and 11.5MM in 2005.  But we are doing it more efficiently.  People have been decrying the loss of mfg jobs at least since the 1950s when primitive automation was introduced.  It’s a tired and a boring argument.  Yes fewer people are making cars, but we’re making more of them and of higher quality.  Where I come from that’s progress.  And by the way, if you work for one of the Big Three, quit, move out of the Midwest, and get a job that is going somewhere. 

4.       The cause of our inflation problem – which was a minor problem anyway and is largely contained – was not oil.  It was liquidity.  Inflation is always and everywhere a monetary phenomenon.  As to the housing market, there was a credit bubble that was particularly pronounced in the subprime market.  It is deflating and lenders are reaping what they sowed.  That’s the way markets work.  Most of the foreclosures involve people who didn’t own a home 5 years ago, had little or no downpayment money invested in the house, and made a bad financial decision (buying more house than they could afford).  They will go back to renting with a lesson learned.  And some other people will buy houses very cheaply from the lenders. Again, that is how markets work. Next.

5.       Corporate Bankruptcy – This is my personal favorite.  At a time of record corporate profits, low interest rates, and a stock market at record highs some people can still find a reason to complain.  Notice the companies your correspondent lists?  Auto suppliers and auto assemblers.  Do I really need to recount the ways in which the auto industry has attempted, unsuccessfully, to commit group suicide?  The domestic auto industry is an anomaly in an otherwise robust economy.   

I would like to buy your correspondent a copy of Free To Choose as a Christmas present.


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