Sunday, August 21, 2011

Rupert's Ironically Elitist "Wall Street Journal"

[This has become one of my favorite articles to re-edit. If you've read it before I apologize if any of your favorite bits are missing. :)  I really edit better than I write and both skills need improving. Now, don't worry, I'm not delusional. I actually know no one ever reads this blog. :)]

I hope I'm not getting too esoteric here, so I'll try to explain as I go. First, and I hope this is not true, the Wall Street Journal actually seems to have changed into a rag since Rupert Murdoch purchased it. Second, Rupert the Bear (left) is a children's cartoon character in Great Britain. I wish I could take credit for being so knowledgeable about the Brits because I do watch a lot of British television, but alas, I only know Rupert the Bear from Paul McCartney's musical soundtrack songs for Rupert.

But getting back to this Wall Street Journal thing: is Rupert Murdoch going to change the way we perceive the words "journal" and "journalist" similarly to the way he changed the way we perceive the word "news," as in Fox's version? I ask this because, lately, I have read a few articles from WSJ, probably all editorials, that have, shall we say, appeared to be less scholarly than I remember the Journal as being. I used to see an interesting topic and see the source, WSJ, and say to myself, "That sounds like an interesting topic and gosh, the source is the Wall Street Journal. I might enjoy learning something." Now I don't see things in quite the same light. And honestly, I really was naive enough to believe they would not change the "Journal."  Trust me, I was blinded by my love of my past learning experiences.

You see, I recently stumbled across  an article: "Stephen Moore: Why Americans Hate Economics 
(Gosh, that sounds like an interesting topic and the source is...)  However, the subtitle says it all, really: "In university classrooms—and especially the Obama White House—fancy theories of macroeconomics defy basic common sense." Really? Is the article really about common sense versus the economic theories taught in economic classrooms that underpin much of what is published in the Wall Street Journal?

And why is Obama "especially" at fault? Why would one want a White House that didn't understand "fancy" university class economic theories and even, gasp, use them in the worst downturn since the big one? "Common sense" is the reasoning submitted, but please, please put me on board the plane whose pilot studied fancy aeronautics. That seems common sense to me.

The phrase "common sense" has always bugged me. I have told the story before about the drunk guy calling me, a reference librarian at the time, from a bar and saying "Hey, buddy, tell my friend here that the moon is bigger than the sun, I got a twenty dollar bet on it. I'm giving him the phone." You see, common sense is not all that accurate. It's why we have things like the scientific method and fancy theories.

And those fancy economic theories, especially the Keynesian ones that usually come up in recessionary times, are particularly relevant to us exactly now, as we struggle out of the worst economic recession since...well never mind... you get the picture. Here is an excerpt of the completely (how do I put it? I hate to use words like "asinine")...dismal logic of a WSJ article these days.
Consider what happened last week when Laura Meckler of this newspaper dared to ask White House Press Secretary Jay Carney how increasing unemployment insurance "creates jobs." She received this slap down: "I would expect a reporter from The Wall Street Journal would know this as part of the entrance exam just to get on the paper." 
Mr. Carney explained that unemployment insurance "is one of the most direct ways to infuse money into the economy because people who are unemployed and obviously aren't earning a paycheck are going to spend the money that they get . . . and that creates growth and income for businesses that then lead them to making decisions about jobs—more hiring."  
That's a perfect Keynesian answer, and also perfectly nonsensical. What the White House is telling us is that the more unemployed people we can pay for not working, the more people will work. Only someone with a Ph.D. in economics from an elite university would believe this.
I have two teenage sons. One worked all summer and the other sat on his duff. To stimulate the economy, the White House wants to take more money from the son who works and give it to the one who doesn't work. I can say with 100% certainty as a parent that in the Moore household this will lead to less work.
First, let's repeat the most obviously interesting statement made by Mr Carney:  "I would expect a reporter from The Wall Street Journal would know this as part of the entrance exam just to get on the paper." I would, too. It is dead serious that a White House Press Secretary has stuck his neck out this far. And I'll guess from the no holds barred wording that this was not the first time Mr. Carney has come across an improbably non-scholarly question from the Journal. If you have never heard of or have forgotten Keynesian economics, trust me, that it is respected enough for all my economics teachers, respected by all your economics teachers and historically respected by the WSJ itself. It is indeed Macroeconomics 101 which most people take in college, and hopefully most if not all Wall Street journalists. I'll bet it is even taught in high school economics classes these days. Don't let the word "theory" throw you. Adam Smith's theories are discussed right alongside those of John Maynard Keynes. It's all theory so let's just use some "common sense." The basics of the Keynesian model are easy to understand particularly in recessionary times and should seem even more commonsensical today.

A bubble bursts in the economy, people lose jobs, so these people have no money to spend, businesses suffer from lack of demand, businesses lay people off, so these people have no money to spend, businesses suffer from lack of demand, businesses lay people off, so these people have no money to spend...

This leads to a death spiral for the economy. It led to the Great Depression. I cannot overstate this: it  is standard economic theory. It used to be understood by Wall Street Journalists.

Keynesian economics was developed fully during the Great Depression and is the only way of explaining our sudden extraction from this depression during WWII. The government borrowed money and spent it on industrial production of weapons. Why would building weapons and armies extract us from the Great Depression? It is common sense among economists that the money pumped into the economy multiplied throughout the economy and soon Ann's Pie Shop sprung up even though Ann was not manufacturing bullets but feeding people who had paper dollars to spend, borrowed paper dollars that were injected into the economy. Heck, you don't have to be an economist to understand such a common sense idea. "We are all Keynesians now." was a quote attributed to Richard Nixon by Milton Friedman.

Is it true that when we inject money into the system we would be better off giving it to people who don't have money rather than people who have money enough? Yes, in Christian ethics AND common sense. If money is given out, it will more likely be spent, or injected into a sluggish economy, if people receiving the money don't have a paycheck. Make sense? Then this money is spent again and again and again by the people who receive it in each subsequent transaction. This is the multiplier effect. It isn't perfect because sometimes the money reaches wealthy people and it stops (through their obvious fear of what might happen in times of recession), and this money goes into a bank that, oddly enough, doesn't want to let go of it (for the same fearful reason) during a recession. That is the concept of a "credit crunch." Notice that terms like "credit crunch" wouldn't even be really possible without those fancy Keynesian type theories. Now, going back to our example, if we gave the money instead to the wealthy people at step one, this money would make it's way fearfully into into a bank, not be lent because of the bank's fear, and it would be as if the money never existed. Transactions of money which lead to other transactions of money are the only actions which get capitalism rolling again when there are large numbers of fearful people that make up the "demand" side of the supply/demand equation.

The real insidiousness of this excerpt from the "Journal" is the description of the son who "sits on his duff." That is, in actuality, a class warfare statement --plain and simple. People lost their jobs in this downturn because rich people played with their money. That might be slightly debateable, but people certainly lost jobs through no fault of their own. The economy sunk. Who among us was not fearful of losing their job? Who among us does not know someone who is desperate right this minute to find a job?

The tip off that this is a Rupert Murdoch/Fox News type of article is this charge of elitism: "What the White House is telling us is that the more unemployed people we can pay for not working, the more people will work. Only someone with a Ph.D. in economics from an elite university would believe this." No, that's not quite right. What the White House is saying is that unemployment insurance is doing it's function in stemming job loss and honestly in creating new jobs. They are saying that the LONGER we can pay people who are unemployed (remember not by their own choice as is the qualification for benefits) the less employed people will lose their jobs and as an added benefit, the less the unemployed people lose their houses, and the less the unemployed people end up on the street corners selling apples.

Elitism would imply that one is in one's ivory tower with one's educated buddies and didn't care about the average man. This incredibly ironic charge of elitism from someone writing an elitist class warfare article is so ridiculous that it must receive the Rupert Murdoch Good Foxnewsing seal of approval. The article is making a charge of elitism that the Murdoch paper is itself guilty of because of the article that is making the charge.

There may be a few people that can be characterized as sitting on their "duffs," collecting unemployment and enjoying their significantly decreased standard of living as this "elitist" article suggests. There may actually be some wealthy people who have more than enough money in the bank and collect unemployment because they can, because honestly it is actually owed to them. I just know a lot of people who don't fit this stereotype put forward. I know a lot of people desparately looking for replacement jobs and not finding them. The Wall Street Journal has no moral authority here either as they never did a timely investigation of the knowingly false AAA ratings placed by the ratings agencies on crap derivatives, never saw the financial crisis coming and worked hand in glove with the financial institutions which caused this whole gigantic mess. How dare this "news"paper equate people who are out of work through no fault of their own to a rich journalist's lazy son. People now unemployed paid into an unemployment insurance fund whether directly or indirectly. How dare these class conscious jerks at WSJ berate the unfortunate among us apparently just so that they can defend their own seemingly economically ignorant reporter that they sent to the White House press corps, bash Obama, and thereby publish an article that pleases Rupert Murdoch.

I submit that the title of the article suggests scholarship that we have grown accoustomed to in the WSJ while the article is written for the sole purpose of expounding the politics that we have grown accoustomed to from Fox News.

Besides, would you castigate one of your kids in public to make a political point? Loyalty to Rupert Murdoch must be mighty demanding.

Oh, yes, my apologies to Rupert the cartoon bear.

This is the demo for "We All Stand Together" for the animated Rupert the Bear. I often like demos better than final versions even though they are bare :) and unfinished. The song's final version went to #3 on the UK chart even though it was written for a children's cartoon. Rupert, the non-animated version whose newspapers do silly illegal things, and those employees he influences could all possibly benefit from the moral values espoused in this silly little song for children about standing together in bad and good times.