How many liberal myths can a news announcer cram into one 90-second, top-of-the-hour news briefing? On a major news radio station’s New York affiliate one recent December evening I counted seven.
First the reporter announced that seasonal hiring was up this year compared to last year and that increased holiday spending showed the economy was improving. He also claimed that goods being purchased in the U.S. are unfortunately being made more often overseas.
Let’s discuss the three myths he propagated right there: elevated part-time hiring reflects economic health, consumer spending drives growth and trade imbalances are harmful.
1. The fact that retailers are hiring more temporary help isn’t a sign the economy is thriving – it’s a sign there are more underemployed workers taking part-time work below their skill level. Increased part-time hiring also reflects employers’ reluctance to take on “full-time,” 40-hour-a-week employees whom they must soon provide health insurance per Obamacare.
2. Consumer spending doesn’t necessarily drive economic growth; investment and production do. There’s nothing to consume if manufacturers don’t have the capital and the optimism that investing in productive enterprise will be worth it. And manufacturers don’t think production will be worth it if they’re saddled with confiscatory tax rates and burdensome regulations.
3. Trade imbalances reflect the fact that some countries have more stable economies and reliable currencies than others, the latter of whom must depend more on tangible production efforts to demonstrate they have something of value to trade.
After this trio of falsehoods, the announcer chirped that gas prices were lower than they’d been in months—a boon for the economy—but higher than this time last year, which could reflect rising wages.
So, now seasonal fluctuations in gas prices reflect economic growth and high gas prices supposedly reflect improving wages. This is also false.
Gas prices are always higher in the summer when the weather is better and more Americans are out and about. Gas prices declining from June to December says nothing about economic performance. Current high gas prices are also less likely a reflection of increasing income—which we know is historically low—and more likely the result of instability in the Middle East, forecast scarcity of oil and looming inflation.
The announcer then mentioned Obama’s trip to Michigan to grandstand on the fiscal showdown, and parroted his claim that spending cuts must be balanced with tax increases. He concluded that the Dow Jones Industrial Average was up slightly due to optimism over progress in the fiscal cliff talks.
But revenue increases are not the same as tax increases. Lowering marginal tax rates on high-income earners increases revenue because it means they will not scale back their investment and hiring to avoid being gouged.
Finally, no one can say on any given day why the Dow is up or down, and analysts frequently project their prejudices onto such pronouncements. It’s equally possible the DJI is up because investors believe little progress is being made, automatic budget cuts are going to kick in and we’re finally going to start reining in spending.
At this rate of confusion about how the economy actually works, the media will soon be reporting flying reindeer sightings.
