THE BLOG

George Bush and Lies About The Economy

05/25/2011 12:15 pm ET

The Wall Street Journal has an interview today with George Bush that gives great insight into the disinformation, lies and, charitably, cognitive dissonance that underpins the Administration's economic policy.

"We have lost sight of what it means to be a nation willing to be aggressive in the world, and spread freedom or deal with disease," he said in an interview with The Wall Street Journal. "We have lost our confidence in the ability to compete internationally."

Actually, we've been pretty aggressive in the world. Putting aside that little mess in Iraq, the U.S. has tried for the past several decades to impose an economic system that, increasingly, people don't want. In Costa Rica, for example, 100,000 people turned out to protest the Central American Free Trade Agreement, which only passed by the barest of majorities in a national referendum. The same kinds of protests can be found in other corners of the world.

The truth is that one reason for this press offensive is that Bush and Republicans are concerned about the deep dissatisfaction bubbling up even from their own ranks about the insanity of so-called "free trade." There is a huge political moment at hand when two-thirds of Republicans say they believe trade has been a bad deal for Americans.

The reaction from Bush---and, frankly, from the media pundits and still a few Democrats---is pretty typical: blame the people. We're afraid, we don't understand the "real" benefits from trade and we should just buck it up and be brave and confident. I can't help but feel that the president---who made his own fortune thanks to connections and cronies and friends of the family, not hard work---is calling for economic bravery with the same voice that stirred inside him when it came to serving in Vietnam: let someone else carry the burden.

Then, in the interview, the president just turns to a series of whoppers:

In the interview, Mr. Bush repeated his belief that free trade and globalization are good for Americans. "There's a lot of high-paying jobs as a result of trade," he said, noting that the current strength of U.S. exports is helping to pump up overall domestic growth. He also reiterated his often-stated belief that trade helps lift poor nations out of poverty. That, in turn, could help relieve the pressures that create illegal immigration to the U.S., he said.

But Mr. Bush also observed that skepticism toward free trade and globalization appears to be growing. "The United States has been through these trends in the past," he said, noting that tariffs levied before the Great Depression and in its early days exacerbated the nation's economic decline. "This country has got to make sure that we don't isolate ourselves or try to wall ourselves off from the world."

In fairness, these are whoppers that the president is not alone in making.

Whopper #1: the current rise in exports has very little to do with the imposition of so-called "free trade" agreements like CAFTA. It's almost entirely due to the fall in the dollar---which was overvalued. I've pointed out sometime ago that bringing down the dollar was a better way of dealing with the Chinese currency question and our overall trade deficit than the war of words with the Chinese over China's currency valuation. Yeah, a lower dollar makes tourism more expensive for Americans but the real people annoyed by a lower dollar are the executives at Wal-Mart (and other companies) who love a high dollar that makes their imports from slave-labor countries cheap.

Whopper #2: what, exactly, is the number of high-paying jobs resulting from trade? I'm not surprised that the Journal lets that assertion go unchallenged. But, it is highly questionable if not an outright lie. In fact, the opposite is likely true, as I underscored in highlighting a story by Louis Uchitelle of The New York Times. Here's the important excerpt:

Across America, more than 30 million people have been forced out of jobs since the early 1980s, the Bureau of Labor Statistics reports, and regaining lost incomes has not been easy. Nearly 50 million new jobs have been created over that same period, according to the bureau, so there are always new opportunities but more often than not at lower pay. Among those who have lost work, only a third held new jobs two years later that paid as well as those that were lost, according to the bureau's surveys of displaced workers. Another third of those displaced were in jobs that paid, on average, 15 to 20 percent less than their previous employment -- while the final third had dropped out of the labor force entirely.

Sure, trade has created some high-paying jobs--I'm guessing in the banking and financial services sector at the very high end. But, the actual stats show that, broadly speaking, most people are not finding "a lot" of high-paying jobs.

Whopper #3: that so-called "free trade" alleviates poverty. So-called "free trade" is based on the search for the lowest wage possible. In fact, so-called "free trade's" promise of economic growth is false. Let me say that again: false. If you look at the facts, as my colleague Mark Weisbrot did. I cited a piece of Mark's incisive analysis which is worth repeating here:

If we ignore income distribution and just look at income per person - the most basic measure of economic progress that economists use - the last quarter-century has been a disaster. From 1960 to 1980, per capita income in Latin America grew by 82 percent, after adjusting for inflation. From 1980 to 2000, it grew by only 9 percent; and for the first five years of this decade (2000-2005), growth has totaled about 4 percent. To find a growth performance in Latin America that is even close to failure of the last 25 years, one has to go back more than a century, and choose a 25-year period that includes both World War I and start of the Great Depression.

Whopper #4: is a natural extension of the previous whopper---so-called "free trade" will alleviate immigration. Actually, it is exacerbating the movement of people. If you just look at Mexico, NAFTA was a disaster, and is a principle reason people are coming from Mexico to the U.S. because that so-called "free trade" deal helped crash the peso and impoverish millions of people who could no longer survive on their land.

I can't end without adding this little tidbit on executive compensation:

"Do I think some of the salaries are excessive at the top? I do," the president said. "I don't think it's the role of government to regulate salary. But I do believe it's a role of boards of directors to be very transparent with shareholders about these different packages, the employment packages that these executives get."

Excessive executive compensation "just sends a signal of unfairness, and people in America want...fairness," Mr. Bush said,...

Two whoppers on that end:

Whopper #1: The administration has been dead set against the attempt to make private equity pay its fair share of taxes. Is there anything more unfair that sends a particular signal to people than the ability of private equity big shots to pay just 15 percent on their income, as opposed to the 35 percent other rich people pay? As one expert points out, the Administration is content to let them write their own rules.

Whopper #2: And, of course, George Bush talking about economic fairness is akin to, well, George Bush talking about "stratergy" in Iraq.

Can we ever hear some truth about "globalization" and so-called "free trade."