And this illiteracy has a high price.
Conrad Black
Thursday, April 28, 2011
It would be a mistake if readers inferred that I spend an inordinate part of each week staring incredulously at television screens, as my comments last week, and my remarks here about the quality of economic reporting, might indicate. I don’t watch television often or lengthily, but it is true that apart from classic movies and some history and nature programs, I am usually more or less horrified at what I find when I do watch it.
There are serious and competent people, such as Peggy Noonan, who claim to take some comfort in the quality of American television, and they almost certainly have greater exposure to it than I do. But among my more dispiriting experiences is when I embark on a complete surfing of the hundreds of accessible television channels. The inane talk shows, mouthy and platitudinous commentators, news programs that convey only pap about health, food, and social work, corny sitcoms, mindless violence, ham acting so implausible that drama verges on slapstick, punctuated by screamed interruptions of advertising — it is all a worrisome comment on the state of public taste. And, contrary to widespread belief, it is not markedly better in other countries, though British historical programming is usually very good, and Canadian television news is superior to America’s.
This is of a piece with American television’s usual standards of explanatory journalism. I watched almost gape-mouthed at what CNN represented as an analysis of high gasoline prices this week. The implications for the president’s popularity were laboriously explained. But at no point in this exposition did the fact that the U.S. federal government has run up deficits of $3.5 trillion in the last two years, in a country that had a money supply of a little over $1 trillion at the start of this fiscal orgy, rate a mention as an explanation of why commodity prices are rising. (This is a 32 percent increase in the deficit — 27 times the historic level of federal-deficit increases in the entire history of the country before the onset of the Obama economic miracle.) We cut to Speaker John Boehner, who said a surtax on the income of oil companies would be considered.
The day before, I had seen an experienced interviewer on the same network ask the secretary of transportation about skyrocketing gasoline prices, and receive the halcyon assurance that “all hands are on deck” to deal with it. No CNN person in these different segments asked or said anything about the implicit theory that the world’s petroleum- and commodity-exporting countries were to sit as mute as cigar-store Indians while the value of the dollar was eroded as a matter of policy, to prevent deflation. Inflation will prevent deflation, but is not a lesser evil. A very large number of observers outside the U.S., and a great many economically literate Americans, think that the Treasury and the Federal Reserve have engaged in madly excessive money-supply increases through federal spending, and that traditional inflation from too much money chasing too few goods is inevitable.
In the 27 months of the Obama administration, there have been spectacular rises in the prices of gasoline ($1.83 per gallon to almost $4), oil ($41 per barrel to over $90), gold ($853 per ounce to $1,500), corn ($3.56 per bushel to $6.33), and sugar ($13.37 per pound to $35.39). The real median household income has declined by $300, to under $50,000; the number of food-stamp recipients has increased from 32 million to 43 million; the number of people officially in poverty has increased by 10 percent, to 44 million (more people than the whole populations of Poland or Spain); the ranks of the long-term unemployed have increased from 2.6 million to 6.4 million; and the U.S.’s position in the rankings of economic freedom of the world’s countries has declined from fifth to ninth. I have admitted that my canvass of television news and comment is sketchy, but I have seen almost no reference to any of these problems except the prices of oil, gold, and gas.
Federal Reserve chairman Ben Bernanke is an undoubted academic expert on the economic history of the Great Depression. And he is doubtless correct that the Depression would have ended more quickly than it did if Roosevelt had been able to spend more and pump the prime more vigorously. Mr. Bernanke, in deference to his position and undoubted academic qualifications, has been given the benefit of the gigantic doubts that exist about his policy, including the latest foray into outer financial space with “quantitative easing 2,” in which $600 billion has been spent buying Treasuries to put money in the pockets of those who might spend it. The whole design of the policy — the incitement of profligacy by the profligate — was mad, and there is now, finally, after much noisy and orchestrated worrying from abroad, real concern that the intended solution just aggravated the problem.
In the midst of these innocuous explanations of rising prices and soft interviews with senior officials of both parties, concerns were highlighted by the revelations that the leading bond fund in the country, Pimco, was selling and even shorting U.S. Treasuries, and that the rating agency Standard & Poor’s had put the U.S. government on credit watch. This is a bit rich, coming from a firm that certified hundreds of billions of dollars of worthless real-estate-backed debt as investment grade three years ago.
I am always suspicious of those who endlessly lament that conditions and human character and intelligence, standards of probity and leadership and so forth, are all in decline, and are a shadow of what they were, usually in furtherance of the self-interest of the gloomy Source of the nostalgia. I don’t believe they are, and even if they are, this is certainly not irreversible; it is, in fact, aberrant. But here is a public-policy problem, the rising cost of essential items, that affects every American, that has roused great public concern, and CNN — not, I fear, unrepresentatively of American television-news services — deals with it as if it were an inexplicable phenomenon of unknown origin.
The transportation secretary was not pressed to say what his nautical metaphor for battle stations meant, or to explain the administration’s reluctance to assist in developing alternative energy sources and increase U.S. oil production, rather than peddling bucolic fables about windmills and the sun, the new millennium’s adaptation of Quixotry. Speaker Boehner was not pressed to explain why he thought the oil companies were the authors and beneficiaries of the price rise, since the U.S. government is devaluing the dollar and the Saudis set the price of oil (and, because of the obtuseness of administrations of both parties for nearly 40 years, the U.S. now imports 60 percent of its oil). Raising taxes on oil companies is an insane idea and, for once, this notoriously lachrymose speaker had reason to weep.
The Treasury and Federal Reserve are playing with dynamite, running unheard-of deficits like this. All decent people hope it works, but anyone who has proceeded determinedly and with sure step from Grade 2 to Grade 3 arithmetic can see the risk. Even the existing measurements, which assume that these trillions of dollars of new debt will somehow be retired, confirm a 20 percent rise in the money supply — but the media, which are rarely slow to unload on public personalities in tight corners, have given this wild monetary rise a relatively free pass, to the enhanced peril of almost everyone in the world.
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