For over a century, the Wall Street Journal's editorial and op-ed sections have been upscale, print versions of what is now its notorious, sister outlet, Fox News. While Murdoch's television network cultivates resentment, scapegoating and misinformation among the lower-middle class, the WSJ's editorials, op-eds and regular columns provide 18th century mythology for a more affluent readership. This means unless an informed, conscious person regards the acquisitive impulse as mankind's highest calling and identifies with amorally greedy CEOs, the Wall Street Journal isn't likely to clarify his or her understanding of the current economy.
That said, absolutes seldom apply to the media and ironies remain persistent facts of life. In the case of the Journal, at least the straight news stories usually adhere to fact and even an occasional column will offer more than deceptive arguments for the benefit of finance MBAs. Irony was in abundance last week when the Journal's economics columnist, David Wessel, assessed the conflicting views of what is preventing the US from growing out of the recession. He wound up concluding that the nation's health care sector serves as a major hindrance to economic growth.
In their role as handmaidens to multinational corporations and the ultra-rich, Republicans claim government spending crowds out private investment by extracting taxes and competing with private interests for the available money supply. Wessel rightly debunked such plutocratic nonsense. He started by presenting capsule statements of the diversionary Republican mythology and the contrasting Keynesian view that government spending remains necessary for kick-starting the economy. "The usual columnist's device at this point," he wrote, "is to criticize both views, and segue to a wise alternative. That's not my intent. The facts don't favor the case that big government is crowding out the private sector now: There is so much unused capacity, so many idle workers, so much low-interest credit available," that the Republican viewpoint holds no credibility.
To get a better understanding of how and why investment capital is being misapplied, Wessel interviewed New York University economist Paul Romer. Romer's studies led him to conclude that "the bloated financial sector" and the American health care system have "harmed the U.S. economy more than any of our post-World War II communist adversaries did."
Investment in those two "bloated sectors," according to Wessel, has sucked up capital that could otherwise go into industries more capable of growing the overall economy and employing more people. The US economy is simply not getting a satisfactory return for all the capital pouring into financial services and health care.
Professor Romer believes this misallocation of capital has resulted because the two sectors bought off Congress to remove regulation and oversight that might otherwise have restrained their malignant growth. Health care, for example, will soon reach the point where it accounts for one-fifth of the country's entire GDP, yet our health system and many of its outcomes are worse than those of most advanced nations. While employment in health care continues to grow as a result of the increasing demand of an aging population, the Bureau of Labor Statistics found that the median incomes of most occupations in that sector fall below the median for the rest of private industry. In other words, as more work shifts into health care, America increasingly becomes a two-class, have-and-have-not society.
Romer despairs of Washington's ability to impose the sort of wise oversight and regulation that can rationally allocate investment. That is because pork barrel interests in Congress will try to prevent every hospital closure and grant denial directed at members' own districts. Instead he suggests that select committees or Super-Congresses of the sort that emerged from last week's debt ceiling deal can more effectively reallocate capital investment.
It remains to be seen how rational and fair the debt-ceiling Super Committee will prove to be, especially with a conservative, over-accommodating president and a Republican caucus in the House that blatantly wants to cripple the economy. The major obstacle to wise capital allocation, however, is that popular sentiment in this country, as managed by the corporate media, remains fundamentally hostile to the notion of government conducting prospective, data-driven, economic planning. Ever vigilant to economic conditions of the 1700s, popular sentiment recoils at the notion of "government picking winners and losers," preferring instead to leave that task to corporate CEOs and their moneyed patrons.
As a result, planning in this country generally occurs retrospectively, that is, only after things crash and burn. In the meantime, the country heads toward a future where everyone will be drawing blood from each other and completing the electronic records for it.
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