Posted by: Rick | Friday, June 26, 2009

Pie in the Sky: CNBC and the Economics of Fantasy

Since the Great Meltdown last September, I’ve been tracking the business media quite closely, and I can now confidently state the following: Anyone who thinks Wall Street is populated with brilliant, hard-nosed analysts of the real economy is seriously deluded.

Take CNBC, the leading business channel in the world. With the notable exception of Steve Liesman, nearly all of their commentators have swallowed – hook, line and sinker – the completely discredited supply-side doctrine dispensed by Ronald Reagan in the eighties. Never mind that virtually no tenured professor of economics – Republican or Democrat, liberal or conservative – would dare spout such nonsense as the Laffer Curve. It would be a career killer. But alleged CNBC “experts” like Rick Santelli remain stuck in their rusted-out DeLoreans. The real world has passed them by.

As Jonathan Chait so astutely pointed out:

American politics has been hijacked by a tiny coterie of right-wing economic extremists, some of them ideological zealots, others merely greedy, a few of them possibly insane. The scope of their triumph is breathtaking. Over the course of the last three decades, they have moved from the right-wing fringe to the commanding heights of the national agenda. Notions that would have been laughed at a generation ago–that cutting taxes for the very rich is the best response to any and every economic circumstance or that it is perfectly appropriate to turn the most rapacious and self-interested elements of the business lobby into essentially an arm of the federal government–are now so pervasive, they barely attract any notice. . . .

It was not always this way. A generation ago, Republican economics was relentlessly sober. Republicans concerned themselves with such ills as deficits, inflation, and excessive spending. They did not care very much about cutting taxes, and (as in the case of such GOP presidents as Herbert Hoover and Gerald Ford) they were quite willing to raise taxes in order to balance the budget. While many of them were wealthy and close to business, the leaders of business themselves had a strong sense of social responsibility that transcended their class interests. By temperament, such men were cautious rather than utopian.

Why are today’s business reporters such dreamers? It’s simple: They’re Republicans! And so are all their friends. To question their party’s absurd economic orthodoxy would be to look . . . soft. It’s quite a paradox: in order not to be ridiculed as a “bleeding heart liberal,” you have to believe in the economic equivalent of the Tooth Fairy.

(Just for the record: Bloomberg News is considerably more sensible.  Go figure.)



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