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  • The Economics of the 99% How to decipher the economics of the NYT

    John Weeks

    By John Weeks.

    1976 stamp commemorating Adolph S. Ochs, owner of the NYT who in 1896 coined the motto, "all the news that's fit ot print", and the paper when the front page carried no photos.

    In late December I visited Egypt and on the 28th innocently bought the International Herald Tribute, which is a 100 percent mini-clone of the New York Times, running the same articles, just fewer of them. My motivation was innocent. I merely sought the latest news on trades and "free agent" signings in baseball. However, I made the error of reading more than the rather meager sports page.

    And an error it was, potentially damaging to rational thought. Many progressives quite unkindly accuse the NYT of feeding its readers false information ("lies" is the technical term). I only wish this were true. If it were, the venerable NYT could be easily dismissed like the venal Fox News. We find in the "paper of record" articles employing a much more sophisticated and effective form of mendacity, distortion and selective presentation of the facts.

    The 28 December copy of the NYT (aka IHT), the only one I brought the entire year, lived up to its reputation beyond my expectations. On page one I found the headline, "Low-cost labor gives Spain edge in the eyes of carmakers". In this "news" article, the unsuspecting reader learned "four years of economic turmoil and the euro zone's highest jobless rate have made the Spanish labor market so inviting…that Ford Motor and Renault recently announced plans to expand their production in Spain". The article goes on to tell us that painful as they might be, falling wages "are exactly what Spain needs" to regain "competitiveness". In other words, the austerity medicine, as bitter as it may be, works, luring investment that will increase employment and bring back prosperity. We may not like it, but austerity works.

    Actually, no. The author of this article might have usefully read the NYT on the next day (I found this on the web), where an article reported that car sales throughout continental Europe fell disastrously lower in 2012 than in 2011 (when they were lower than in 2010, etc., etc.). With a bit of analysis not quite as complex as (2 + 2 = 4), the author of the "Low-cost labor" article might have reflected on the following. Lower

    wages throughout an economy mean lower purchasing power, and lower purchasing power means selling less (e.g., automobiles).

    For readers not completely convinced that low wages are a really good thing for us all, the "business" section provided further instruction. There we could read that a dock strike loomed for the eastern seaboard ports. I shall not keep you in suspense as to the take on the strike in the NYT article: "…a two-month walkout in 1977 paralyzed the flow of tens of billions of dollars of imports - and US retailers and other businesses fear a painful replay if the 14,500 dockworkers make good on their threats". Nor need I report that the "strike could cause extensive economic damage at a time when the economy is already weak".

    Analogously to his low-wages-in-Spain colleague, the author of this article might have reflected on the possibility of a link between the "generous wages" of the dock workers and the strength of the US economy. The article proceeds innocent of such a possibility, explicitly lamenting the allegedly high pay of East Coast dock workers compared to "less expensive [i.e., non-union] ports like Jacksonville, Florida". If the reader still had not quite on message, the final tutorial could be found in an "op-ed" explaining why government spending burdens us all. In late 2012, the French actor Gérard Depardieu announced with much fan-fare that he would abandon his citizenship and move elsewhere because of the increase in taxes on the rich initiated by president Francoise Hollande. Russia seems eager to take him, though to be truly safe from taxes Depardieu should consider Antarctica where international treaty prohibits exercise of national sovereignties.

    The author of the op-ed begrudgingly conceded the need for taxes, quoting US Supreme Court Chief Justice Oliver Wendell Holmes, "taxes are the price we pay for civilization". However, the author reminds us that "governments are notoriously bad at managing the money they collect", and, as a result "no matter how high the taxes, there is never enough". Feckless spenders all, governments.

    At the risk of vulgarization (though it would be almost impossible to be more vulgarly simplistic that these articles), I summarize the NYT message so devotedly transmitted in the interests of the 1%. Lower wages create employment, higher wages create disaster, and the Government creates waste and corruption. This is reactionary nonsense. Higher wages help generate aggregate demand, as well as serving as a spur to increased investment to raise productivity. Strikes are the only effective vehicle for raising wages (see the chart below). In light of the massive corruption and malfeasance in private finance over the last twenty years, accusing governments of fiscal mismanagement represents the ultimate in chutzpah.*

    The factual information in these three articles is true. The problem lies (so to speak) in the ideological distortion of selective presentation of that information. In 1896 Adolph S. Ochs, having recently purchased the NYT, gave it its famous motto, "all the news that's fit to print". I suggest a one word change, "all the news that's fit to distort". Read and watch the Real News Network to get the news without the distortions.

    *If you are unfamiliar with this Yiddish word, you should add it to your vocabulary. It is typically explained with the following example. A child murders her/his parents and as the judge prepares to pass sentence, she/he pleads for mercy on the grounds of being an orphan.

    Average weekly earnings, strikes days and union density,

    United States, 1964-2010

    Notes: Union density is the percentage of employed workers in unions, private and public sectors. Strike days in millions. Earnings in constant dollars. All measured as each year's value minus the average for all years. Union density was about 23% in 1964 and less than 10% in 2010. In 1970 strike days reached about 52 million, falling to 300 thousand in 2010. Source: Bureau of Labor Statistics, US Department of Labor.


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