Why The Financial Press Buys Into A Non-Existent Keynesian Consensus

Few Wall Street Journal readers know that its news and opinion sections are written and managed separately. Whereas the opinion section – as edited by the late Robert Bartley and now Paul Gigot – consistently champions fiscal discipline, smaller government,  and lower marginal tax rates, analysts from the Journal’s news side – David Wessel and Gerald Seib, in particular – are consistent proponents of Keynesian tax and spend policy. That the news section delivers conclusions at odds with the opinion section puts the Journal at risk of an errant headline like: “The Wall Street Journal Says Keynes Was Right.”

David Wessel consistently represents the Keynesian party line in the news section. In his most recent analysis, his conclusions about the effects of the sequester coincide with none other than the New York Times’ Paul Krugman. Although Wessel’s language is more restrained, their conclusions boil down to one and the same.

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Poverty And Hunger In America: A Letter From The Front Line

My article Even Matt Damon and Beyonce Could Not Sell the True Child Hunger Statistic (One In A Thousand) stirred up a hornet’s nest. I used USDA statistics to show the child-hunger lobby’s “one-in-five-children-hungry” statistic is a wild exaggeration. Instead, maybe one in a thousand children are hungry on any given day – a number not statistically different from zero. This drew a righteous response from the CEO of the largest hunger charity (Feeding America), who argued that “even one hungry child is one too many.” (I guess he would then agree that a child killed in an entertainment park is one too many, so we should close them down along with those dangerous city zoos). Another angry critic invited me to her home town to view child hunger first hand. I requested that she send me some cases from her community, but I am still waiting.

I reproduce, in its entirety, a remarkable comment from a couple living in poverty, in which they describe their experiences with hunger in their own home and community – a report, so to say, from the front lines of poverty in America.

 ”John Doe” writes in his comment:


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Even Matt Damon and Beyonce Could Not Sell the True Child Hunger Statistic (One In A Thousand)

To understand the magnitude of childhood hunger, we need a snapshot of how many children are hungry on a given day.  According to a typical alarmist, sixteen million children “face hunger every day.”  That is a huge figure — more than one in five children — that suggests a massive failure of food stamps, free school lunches, and private charity.  After all this time and public and private expense, so many children remain hungry in a rich country like the United States! What a disgrace!

The U.S. Department of Agriculture publishes data from which one can calculate how many children are hungry on a given day. (Just as the Census Bureau asks where you live on the day of the census).  The conclusion for the number of hungry children is (extended drum roll): One tenths of one percent of children, or one per thousand. Even if we use the USDA’s liberal measure of hunger at least one incident over  twelve months, we get a child-hunger figure of one percent.

Such  low figures (one in a thousand or one in a hundred) will be ignored by the hunger lobby, food stamps expansionists, and the media because it suggests a problem that has been solved. (Discussion would then have to turn to childhood obesity, as it already has).

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Leading Economist Gives Up On Putin’s Russia

Sergei Guriev has left Russia. Guriev, the Dean of Moscow’s New School of Economics, is Russia’s most respected economist with a deserved international reputation for his publications on contract theory and political economy. The New Economic School, which he heads, is the leading school of economics in Russia and remarkably among the best in Europe. Its small MA and BA programs attract Russia’s best young minds, and its graduates teach in top economics departments in the United States and Europe and occupy leading positions in government and business.  The New Economic School has the beginnings of the Russian Harvard – a private institution in a sea of state universities that has made its own way through hard work, brilliance, and a superior educational program.

http://www.forbes.com/sites/paulroderickgregory/2013/05/30/leading-economist-gives-up-on-putins-russia/ 

‘Austerity’ To Blame? But Where’s The Austerity?

Die-hard Keynesians bemoan that, with a few exceptions, the world’s economies are drowning in the quicksand of austerity. They preach we need more government spending and stimulus, not less. Northern Europe should bail out its less-fortunate neighbors to the South so they can pay their teachers, public employees and continue generous transfers to the poor and unemployed. If not, Europe’s South will remain mired in recession. In America, Keynesians entreat the skinflint Republicans to loosen the purse strings so we can escape sub par growth. They advise Japan to spend itself out of permanent stagnation and welcome recent steps in this direction.

 


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Why Obama Cannot Match Germany's Jobs Miracle

In 2002, Chancellor Gerhard Schroder appointed a jobs council headed by Volkswagen’s Peter Hartz to solve Germany’s high unemployment. In 2011, President Barack Obama similarly appointed a jobs commission headed by General Electric's Jeffrey Immelt to achieve the same goal.  (At the time, Schroeder headed the SPD, the equivalent of America’s Democratic Party.)

Germany’s labor market turned around in a dramatic fashion after Schroeder implemented the Hartz Commission’s sweeping reforms between 2002 and 2005. In contrast, Obama’s Immelt Council quietly disbanded without making substantive proposals, and America’s worst jobs recovery of the postwar period continued.

Obama cannot duplicate the German reforms. They reject his Keynesian belief that jobs are created by government stimulus.  Instead, the Hartz reforms rest on the common sense notion that people take jobs when work, rather than welfare, pays. Such an approach violates Obama’s core belief that government must make the lives of the unemployed as comfortable as possible. No, the Germans say. If the state gives too much, the unemployed will have no incentive to take jobs, even when they are available.

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