Raymond Richman - Jesse Richman - Howard Richman
Richmans' Trade and Taxes Blog
Journalists and Their Economic Illiteracy I.
The editorial page of the Trib-Review in its Saturday edition 4/16/1016 illustrates what is wrong with the media today. First, the editorial on the page criticizes the Republican Party for not opposing the Export-Import Bank created by the Truman administration in 1945. The editorial calls the X-Im Bank crony capitalism because the bulk of its loans go to large companies like Boeing and GE, but in 2015 the bank made more than 2,300 transactions that helped U.S. small businesses export their products. The Ex-Im bank guarantees to keep U.S. banks harmless on loans they make to foreigners to purchase U.S. goods but requires them to use sound economic criteria when they make such loans. The Ex-Im Bank has been entirely self-funded since 2007 and cost the government very little over its life as a bank. It adds nothing to the budget deficit at all. Surely there are better things to cut. There are, according to the EX-Im Bank 85 foreign countries that have export credit agencies. It is not an example of “Crony capitalism”. The latter is evidenced by government grants, subsidies, and tax breaks to favored companies. Examples are the huge subsidies and guarantees given companies producing electricity from wind and solar sources and the tax credits given to buyers of hybrid and electric vehicles which line the pockets of the companies that produce such vehicles. Given the fact that the U.S. imported $500 billion worth of goods and services in 2015 than it exported, there is good reason for its continued existence. The editorial would have been more appropriate when the U.S. was the leading creditor nation in the 1950s and 1960s but today it is the leading debtor nation.
Second, in a column on the editorial page John Stossell, popular FoxNews commentator, has one of the worst columns he has written. In it, he extols the Libertarian Party, three of whose candidates for president Stossell interviewed. One of them, Austin Pertersen, advocatesliberalizing our immigration laws so that immigrants “will not break the law if they know that there’s a chance they can come here” legally. Nothing about the existing problem of millions of illegal immigrants residing in this country. Stossell writes that “Trump shouts about the bad effects of global trade, but his destructive bans and tariffs would do much more harm.” First of all, Trump has never said he is against trade and, second, his proposed “deals” to deal with the unemployment- creating trade deficits would have only beneficial effects, not do harm. Under international WTO rules, countries that experience chronic trade deficits are authorized to impose countervailing tariffs. Trump writes “some Americans lose jobs, but more gain work, and better work, because free trade helps Americans expand businesses – in America.” That is true but only if trade is in balance. Where has Stossel been during the past two decades? Millions of American manufacturing workers lost good-paying manufacturing jobs, remained unemployed or took inferior jobs in service industries. The GNP data published by the U.S. Bureau of Economic Analysis shows that the annual trade deficits were a subtraction of over $700 billion in 2008 the year before the economy collapsed causing the Great Recession, not a coincidence!
The third piece was an interview the Trib had with Sebastian Gorka, professor of military history at Marine Corps University, entitled “What’s needed to defeat ISIS”. He writes, “If we have the requisite leadership, if we have people who are prepared to empower law enforcement and intelligence agents and our military, and also give our Muslim allies in the regions – the Jordanians,, the Egyptians -- the requisite support, we can defeat this enemy. But we have to have a strategy…” In reply to the question which presidential candidates would be most effective, he replied, “Hillary Clinton is perpetuating the Obama administration’s line that there is nothing Islamic about our enemy. Then we have Bernie Sanders saying global warming is the cause…” Trump is just “lacking in substance”. Although Cruz likewise is lacking in substance, “he definitely knows the seriousness of the threat, and I think he will have a plan.” We do not accept that as “what is needed to defeat ISIS. Trump has stated that he will deprive ISIS of the resources it needs to govern, which sounds like more than Cruz has said.
There were some things worth reading on the editorial page. They were the Letters from Dave Majernik, “Let marketplace dictate wages and Oren Spiegler, on “Heinz Hall,s sinking standards.” And perhaps Colin McNickles essay on “Working Spring.”
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