BCT Editorial – 1/8/09

This page was last updated on January 13, 2009.

Reality check; Editorial; Beaver County Times; January 8, 2009.

The editorial subtitle is “Current economic mess can teach Americans a valuable lesson.”

Below is a detailed critique of the subject editorial.

“President-elect Barack Obama was on Capitol Hill earlier this week, lobbying lawmakers to approve an economic stimulus package as soon as possible.”

[RWC] This is a good point for a whiplash alert.

“And it might not do any good. Japan tried the same thing in the 1990s, and it didn’t work.”

[RWC] Remember this paragraph. I wonder why the editorial failed to note it also didn’t work when Herbert Hoover and FDR tried the same thing during the Great Depression.

“But as difficult as that uncertainty is to accept, the problem is even worse for the United States in 2009 than it was for Japan in 1999.

“In his review of two books on the U.S. economy in The Washington Post, David Smick, chairman of the financial advisory firm Johnson Smick International, wrote, ‘In the 1990s, Japan offered no fewer than eight massive infrastructure spending programs, each to little avail because its financial system remained unreformed.’

“‘The Japanese economy survived its ‘lost’ decade largely because its corporate sector could export goods to a booming world economy. If only we were that lucky.’

“Smick is right to be so ominous. Japan was a creditor nation in the 1990s; the United States is a debtor nation. Japan is a nation of producers; the United States is a nation of consumers. Japan is a nation of savers; the United States is a nation of spenders.

“Basically, the United States today does not have the strengths that Japan did in the 1990s, in large part because of its over-reliance on credit to sustain a false standard of living.

“This doesn’t mean Congress should duck implementing a stimulus package. If anything, the U.S. infrastructure is in even worse shape than the economy, and the program would create much-needed jobs.”

[RWC] Didn’t the second paragraph tell us this doesn’t work? This is whiplash #1.

“Let’s not kid ourselves. The situation is grim.

“As Andrew J. Bacevich, the author of ‘The Limits of Power: The End of American Exceptionalism,’ wrote in The Post earlier this year, ‘The 2008 election finds the Pentagon cupboard bare, the U.S. Treasury depleted, the economy in disarray and the average American household feeling acute distress. Profligacy at home and abroad have combined to produce a grave crisis.’

“This is a critical time for the United States and the American people. We can either learn from history or we can repeat it. The choice is ours.”

[RWC] Here’s whiplash #2. If we’re to “learn from history,” doesn’t that mean not doing what we know doesn’t work?

Finally, we’re eight days into 2009 and the Times has yet to publish an editorial about how we got here. The “[p]rofligacy at home and abroad” comment is an example of hypocrisy on two points. First, for at least the last four years, Times editorials lobbied for more spending on just about every proposal that came down the pike. Second, in December we were treated to two editorials (“Last resort” and “Limited options”) lobbying for even more “[p]rofligacy.”

If the Times were serious about this topic, it would address the roles of government policy and the government sponsored enterprises Fannie Mae and Freddie Mac. Ask yourself why the Times would duck this aspect of the mess.