News Commentary Shows are made extremely popular by relatively sensationalist/biased examples such as The O’Reilly Factor. Most of these shows make a mockery of journalism and confuse the definition of news. But, there is one that I like: Bill Moyers Journal, which airs in New York City on the public Channel 13. Incidentally, the production of his show is paid for entirely by fundraising, and not by PBS. While Bill Moyers holds some political views that I oppose, his conversations with guests and his commentary in general is critical and in-depth. Last night, however, he drifted into the more stereotypical territory of the format, as he criticized Alan Greenspan who recently testified before Congress about the current economic crisis.

I’m essentially glad that Alan Greenspan was willing to admit that he was partly to blame for the state of the economy, and I hope Americans were listening, but Bill Moyers used Greenspan’s somewhat honorable admission of complicity to take potshots at Capitalism, and, for some reason, at Ayn Rand– a dead philosopher whose followers pose absolutely no threat to what passes for conservatism these days. If you read this blog regularly, you may remember that I blogged about Greenspan’s warning of a recession over a year and a half ago. My disappointment in Moyers’s commentary led me to send him the following e-mail through his website last night:

Dear Mr. Moyers,

I have enjoyed watching “The Journal” for a few years now, and I have a great deal of respect for you as a journalist. However, as I watch tonight while you criticize Alan Greenspan for his culpability in the current economic crisis (and, indeed, he is culpable), I’m somewhat disappointed.

Yes, it is true that Ayn Rand was one of Greenspan’s early influences; but, there really isn’t any reason not to believe Greenspan when he mitigates that influence, since his behavior as chairman of the Federal Reserve was far more meddlesome than Rand would have ever liked. Greenspan’s culpability in the current economic crisis actually stems from his involvement in President Bush’s “Ownership Society” initiative– launched several years ago– which, among other things, actively encouraged banks to make loans to riskier prospects. Don’t believe me? The White House website used to say this about “Expanding Homeownership":

In June 2002, President Bush issued America’s Homeownership Challenge to the real estate and mortgage finance industries to encourage them to join the effort to close the gap that exists between the homeownership rates of minorities and non-minorities.

The President also announced the goal of increasing the number of minority homeowners by at least 5.5 million families before the end of the decade.

Under his leadership, the overall U.S. homeownership rate in the second quarter of 2004 was at an all time high of 69.2 percent.

How was Greenspan involved? The rate of increase in the US money supply (the paper, not the gold) doubled from 2004 to 2007– the years in which we ramped up to the problems we’re now facing. That meant that banks had more money in their coffers and the President telling them just what they could do with it.

So, I’m glad you’re pointing a finger at Greenspan, but disappointed that you’re only using the occasion to attack a philosophy that he wasn’t very faithful in practicing in the first place. You may not like Ayn Rand’s philosophy, and that’s okay by me, but I expect you to put that aside when you’re doing your job. That is, if you want to remain credible. There are already too many people like Bill O’Reilly, who exploit the news for spite of opposing ideas. Let those guys have their fun– none of their viewers are really hearing anything they don’t already want to believe anyway.

Your characterization of Greenspan’s shock at the economic downturn was inaccurate as well. In his testimony before Congress, he said he was surprised by the breadth of the problem (a clip which you included in your commentary), but if you’d done a little more homework, you’d know that he was warning of a recession as early as the beginning of last year. The AP Story was picked up by the International Herald Tribune and other major news outlets, and, if you’re interested, you can read it here:

http://www.iht.com/articles/ap/2007/02/26/business/AS-FIN-ECO-Hong-Kong-US-Greenspan.php

It’s important that people like you find and report the truth in the difficult issues that we face. Nobody’s listening to me, but some people are listening to you, Mr. Moyers. That’s a privilege you should handle with care. It’s far more important that we know how we really got into this mess than it is to exploit the situation for short-term gain and a chance to badmouth our philosophical or political opponents.

My best regards to you, and my sincere hope that you’ll try a little harder next time.

Sincerely,
Scott Crumpler

The Wall Street Journal is reporting today that Barack Obama’s tax plan includes an increase in taxes on capital gains and income from investment dividends.

Sen. Obama outlined a plan Thursday to raise tax rates on capital gains and dividend income from 15% to 20% for individuals and families making more than $200,000 and $250,000, respectively. He also detailed a plan to levy payroll taxes on earnings above $250,000 at a rate between 2% and 4%, though that increase wouldn’t occur for at least a decade. Right now, payroll taxes, used to fund retirement benefits, are levied on income up to $102,000.

To put it simply, capital gains and dividends are the income you earn from your investments. With investors’ confidence in the market currently very low (The DOW closed yesterday more than 1600 points lower than it did a year ago.), it would seem counter-intuitive to give the people who have the money to invest any kind of disincentive to do so. And yet, a promise that 20% of any money they make will be taken from them will almost certainly do that very thing. Proposals like this demonstrate at least one of two things about Barack Obama:

1. He doesn’t understand basic economic principles. OR
2. He doesn’t care about the economy or how it affects people.

I happen to believe that Barack Obama does care about what happens to the American people, but it’s of little comfort since it suggests that he knows nothing about the economy or how to foster its growth. The same disincentive will undoubtedly be at work if he succeeds in raising payroll taxes, as it will encourage employers to refrain from giving their excelling employees raises in pay once they begin to approach the newly taxable bracket.

America is at a difficult crossroad this year. We aren’t electing a new president in a time of substantial prosperity or peace. The economy has been faltering for almost a year, and our current president seems to believe that nothing is wrong– that if he ignores the problem, historians will say he finished his term with a stable and flourishing economy. That we have chosen as the two major candidates to succeed him men who have no fundamental understanding of economics themselves is troubling. Whoever gets the job in November is going to have the problem of weak market confidence and tight-pursed employers when he assumes office in January. Americans should think long and hard about this, because we could turn this problem around in four years. Enduring it for another four, on the other hand, could be a disaster.

I’ve just been checking out this book, and it seems to offer some interesting insight into how social conscience relates to capitalism and the market. Corporations that don’t exercise social responsibility end up failing, the thesis goes, which would seem to be valuable support for the notion that capitalism works– that agents of corporate fraud can’t, ultimately, survive in a free market. I’ll let you know how the book turns out, but here is an interesting excerpt from the first chapter:

As evidenced by the number of ethical missteps in the news, today we pay the piper as we tally the sorry record of organizational wrongdoings, infractions, and white-collar crimes, all of which can be traced to a diminishing interest in standards, controls, integrity, and that nineteenth-century commodity known as good reputation. Yet as a society, we define ourselves by the values we choose to emphasize. Beginning in the 1980s, a frenzied quest for efficiency led to the endorsement of individualism over community. The resulting emphasis on short-term returns encouraged a speculative frenzy in the stock markets and merger mania on Wall Street, variously described as “the casino society” [2] and a “circus of ambition,” [3] attacked in the Oliver Stone film Wall Street, and satirized in Tom Wolfe’s popular book The Bonfire of the Vanities. [4] The reputation of the business community as a whole fell to an all-time low. On into the 1990s and today, companies like E. F. Hutton, Drexel Burnham Lambert, and Salomon Brothers committed very public ethical wrongdoings, while others saw their reputations become severely tarnished. Once-giant organizations took a fall, never to recover to their previous grandeur. As suggested by Fombrun, [5] the corporate world has squandered much of its reputational capital and its ability to survive and thrive in the years to come.

One of the most prominent arguments made by those who oppose immigration in the United States is that immigrants take jobs away from American citizens when they come here for work. I’m not sure that’s true. Or, if it is true, I don’t think it’s the real problem in any case. Brink Lindsey’s article about the implicitness of cultural deficiencies in economic and social stratification got me thinking. The general perspective of those who fear losing their jobs to foreign immigrants may be the real source of their troubles.

Take the case of Mexican immigrants who primarily take low-wage manual labor jobs in the US. The value of the American dollar to Americans is low. Americans need more money than they have to buy the things they’re used to being able to pay for. The economy in Mexico, however, is still weaker than ours. The quality of life there is lower.

When immigrants come to the United States, they become a part of our economy and, more specifically, our markets. They value the dollar higher than American citizens do, because they are willing to live in lower circumstances and thus do more with fewer dollars. Also, the population has risen as a result of them being here. That’s fewer dollars to go around, which makes them more valuable, and more people who value them higher than before. That also makes the dollar more valuable.

Now, everyone’s money (without making anymore than before) is worth more than it was. The influx of poorer people into this country, then, improves everybody’s lives– even their own. Of course, there are some Americans who are working those same manual labor jobs that the immigrants want. And the Mexican immigrants are willing to do those jobs for less, because they value each dollar more. So, some Americans end up out of work or in competition with immigrants for employment.

It’s that last part that’s a problem. But, immigration doesn’t seem to be the real source of trouble. Why are these Americans so interested in jobs that someone from a poorer country would want in the first place? We already know they can’t afford to live the way they’re expected to on that pay; yet, for some reason, it doesn’t occur to them to look for better jobs. Thanks to Brink Lindsey’s article, we already know that there is plenty of incentive in the market for Americans to further their education and get more advanced jobs if they really want them.

Instead, they demand that the employers be the ones to pay them more than their jobs are really worth. If the employers agree, the price of the products and services they produce go up, making the value of the dollar continue to decline. This would seem to ensure that conditions will never improve.

It looks like immigration could be very healthy for the United States. What needs to change, then, is not wages or immigration policies, but the self-defeating attitude of the American lower class that struggle to keep jobs only people living in worse conditions than them would want, instead of striving to obtain the better jobs that are available to them .