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Weird Economics (update)
Posted by: McQ on Wednesday, August 08, 2007

That's what James Pethokoukis of US News & World Report found among many of the statements made by Democratic presidential candidates in the latest debate.

For instance, Hillary Clinton said, "You know, six and a half years ago, we had a balanced budget and a surplus; now we are in deep debt with a rising deficit, and it is absolutely true that George Bush has put it on the credit card, expecting our children and grandchildren to pay for it."

Not exactly. Says Pethokoukis:
Hey, the last time I checked, the budget deficit for this year was forecast to be $207 billion, half of what it was in 2004. (The budget might actually be back in the black when the next president takes office.) And while Bush did inherit a balanced budget and surplus from Team Clinton, neither administration successfully fixed the $100 trillion unfunded liability problem with Social Security and Medicare.
But let's ignore that last part, just as the "we" in "we had a balanced budget and a surplus" has been doing studiously for years.

Another little point about who is interested in putting it on the credit card. In fact as I recall it was Democrats putting forward budgets calling for somewhere in the neighborhood of 400 billion in new spending.

Next up was Christopher "Let's make a waitress sandwich, Teddy" Dodd who said, "For every $1 billion we spend [on infrastructure], 40,000 jobs can be created in the United States of America."

Uh, yes, but:
I have no doubt that jobs can be created through government spending. But those billions must be taken from the private sector. Will those billions be used more wisely and efficiently and productively by federal bureaucrats than by private managers? If so, maybe the feds should guarantee a job for everyone who wants one. Using the Dodd formula, it would cost a mere $175 billion a year to employ all 7 million unemployed Americans.
And while they're at it, just raise the minimum wage to $50 bucks an hour.

Old counter-intuitive John Edward said, "Well, look, people don't want a cheaper T-shirt if they're losing a job [from free trade] in the process."

Unless they're naked of course. Then a cheaper T would be nice. Pethokoukis points out:
Inexpensive T-shirts vs. outsourced jobs isn' t really the debate. According to research from the International Institute for Economics, Americans are $7,000 to $13,000 richer because of trade, and removing all trade barriers would permanently increase our wealth by $4,000 to $13,000 per household. And since the North American Free Trade Agreement took effect in 1994, America has added nearly 30 million net new jobs.
But you won't hear John Edwards - or any Democratic presidential candidate addressing a labor audience in a debate - saying that.

Bill Richardson? "What we need to do is say that from now on, America will adhere to all international labor standards in any trade agreement—no child labor, no slave labor, freedom of association, collective bargaining—that is critically important—making sure that no wage disparity exists."
If what Richardson was saying is that American trade negotiators should demand foreign workers make the same as American workers or no trade deals, then what he is saying is no trade with India or China. Incomes in those countries are rising thanks to globalization, but there is a long way to go.
So is that Richardson's point? His plan? No trade with China or India (or a whole host of other countries)?

And, last but not least, a little economic snake-oil from Obama who says, "It means that we are also not running up deficits and asking China to bail us out and finance them, because it's pretty hard to have a tough negotiation when the Chinese are our banker."
This is the myth that "China holds all the cards." Look, the Chinese government needs fast growth to hold down social unrest and justify the continued dominance of the Communist Party there. And the most likely cause of a slowdown there would be a slowdown here first. The last thing China wants to do is start dumping U.S. bonds and cause a recession here.
So it is less than likely that they'd actively attempt to cause that sort of a problem by screwing up the economy of their largest customer through dumping bonds. As Jon points out below, any such threats are probably more likely tub thumping to gain concessions than serious threats ... unless we're to believe Chinese economists haven't a clue of the impact such dumping would have on their economy.

Well that ends your "weird economics" lesson for today. Stay tuned for more Democratic debates for future lessons.

UPDATE: James Pethokoukis sends out a correction. One of the quotes was misattributed. The quote above attributed to John Edwards was actually a Barack Obama quote. He apologizes for the confusion.
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Previous Comments to this Post 

The problem isn’t that these candidates are economic fools, but rather that too many of the electorate are.
Written By: Grimshaw
URL: http://
Well that ends your "weird economics" lesson for today. Stay tuned for more Democratic debates for future lessons.
I’m not argue that they say inaccurate, contradictory, and purely populistic platitudes... they do.

I would love to take the Republican candidates to task on their economics, but they talked about Gay Marriage, Abortion, Iraq, healthcare, restoring honor an dignity to the White House (again), and a few minutes on the moron Fair Tax. Please challenge me on this... but I am not expecting it, figuring most people here are bright enough to recognize that if we implemented the Flat tax in the way it is proposed, we would have a flat tax AND an income and then we can wish one of them would go away...

Maybe if they ever talk about the economy, we can talk about what they say.

On health care, they were talking platitudes, but most of them, except Tancredo, had platitudes that if translated into policy would cost at least as much as the Democratic plans.

Written By: Captin Sarcastic
URL: http://
I missed the part in the posting, Cap, where McQ said that Republican candiates don’t make foolish statements about economics.

That aside, I’d say a random Republican candidate is far more likely to make sense on economics than a random Democratic candidate.
Written By: Grimshaw
URL: http://
Idiot towns-person: "Why is your company moving jobs oversees? You’re killing this city..."

Me: "You want to pay 20 bucks for a hose nozzle? No? Then shut up. Your refusal to pay 20 bucks means we have to meet a certain price to make a profit when we sell to the stores that sell to you. Be willing to pay more, and we can afford to spend more by making it here."

ITP: "But buy american!!!!"

Me: "What american? The Ford made in Toronto, or the Toyota made in Cleveland?"

ITP: "but... But..."

Me: "I thought so..."
Written By: Scott Jacobs
URL: http://
Hate to spell police McQ, but the i-e transposition in the headline must be corrected. Happens to everyone,but you guys are held to a pretty high standard. Plus, it offends my eyes. So please correct and then delete this comment. If you would.
Written By: Uncle Pinky
URL: http://
Yessir! Corrected, sir (thanks for the heads-up)!
Written By: McQ
Frankly, if I ever get a "sir" that I deserve from you, sir, I will count at least some of my hours well spent.

I admire the alacrity, and the willingness of every blogger here to bear the banner with the strange device. Might as well just make you guys my home page.
Written By: Uncle Pinky
URL: http://
I’m curious. Is there any practice by any employer so repugnant that you’d refuse to buy from it? For example, what if the very nice and very cheap rug made in the shop down the road is not only made by slave labor but the little tyke is tortured if he doesn’t work fast enough?

Expanding the focus a little, is there any employment practice so repugnant that you want to lobby our government to prevent that practice from occurring anywhere in this country? See, eg, both the Civil War and OSHA.

Now, expanding the focus internationally, would you personally buy a rug made overseas by the same tortured tyke, who’s now living under a government where such behavior if not legal is widely condoned? What about lobbying our government to prevent anyone in this country from obtaining the benefit of such labor?

as I said, just curious. All are welcome to show how I’m being an idiot today.
Written By: Francis
URL: http://
as I said, just curious. All are welcome to show how I’m being an idiot today.
Show me a little tyke being tortured and made to work I’ll lobby against it. Show me a little tyke who willingly takes on labor because he feels it is in his and his family’s best interest to eat that day, and suddenly it’s not quite as clear a problem, is it?
Written By: McQ
Actually, since parents are usually vested with the authority to make decisions for their kids, it’s actually a very hard problem.

But the basic point that I was trying to get at is that imposing labor standards in international trade agreements is not inherently stupid. At some base level we can legitimately request that the products and services crossing our national boundaries comport with minimal international labor (and possibly even environmental) standards.

For the fundamental reason that I think slavery is so evil that no American should be able to benefit from it.
Written By: Francis
URL: http://
I’m curious. Is there any practice by any employer so repugnant that you’d refuse to buy from it?
Yes, I refuse to buy anything from Citgo.
Written By: MichaelW

I am mellow with beer and the satisfaction of several jobs well done; or, at least, done, so I will answer.


The arguments that you offer always come down to a reductio ad Atrocity. When claiming that slavery is horrible, you leave out the fact that the slavers bought from slave traders. Who were they? Oh, in the specific point that you wish to push, they were only white men in Africa who were there for the singular purpose of advancing slave labour to the Colonies.

More fool you.

Every, and by every I mean every culture (regardless of skin tone), has engaged in the practice of slavery. Does that make it less barbaric? No. Does that make it a wiffle ball bat to beat the U.S. with? For you, yes.

I predict that you will claim that slavery only began in Africa due to increased demand, and the Arab traders were acting out of the best interests of the sold. Unfortunately the history of the Dark Continent whacks you upon the nose.

As a Mick, I feel confident in refuting your projected responses. While I bow to your obviously first-hand knowledge of slave-trading, I must ask some questions:

1. Did African humans sell other African humans to slave traders with implicit knowledge of their rights being violated, under the Declaration of Independence, and later, the Emancipation Declaration?

ii) If’n that is a true posit, why do we not sue the source.

3. Would you like to stand by and drink a couple of beers and eat the gyro/cubano wraps that I’ve developed on my grill? They are pretty good, but not perfected yet. I need better yoghurt for the Tzatziki.

IV. What about England in your GrandWhine, or Saudis or, hell, all the rest (Like Gilligan’s Isle)
Seriously, you seem to confuse verbiage and outrage with rational argument. I’m happy to debate, but it has to be a debate. Otherwise it is only " Are you wearing leather shoes, or belt, or have you ever eaten an egg" dumbassery.

Written By: Uncle Pinky
URL: http://
I missed the part in the posting, Cap, where McQ said that Republican candiates don’t make foolish statements about economics.

That aside, I’d say a random Republican candidate is far more likely to make sense on economics than a random Democratic candidate.
My purpose was to show that it is not a uniquely democratic problem, but unfortunately, Republican candidates spend their time talking about such critical issues as gay marriage and who is more pro-life than the others.

Written By: Captin Sarcastic
URL: http://

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