To: Wall Street Journal
Subject: Austin Goolsbee's op-ed re Jeremy Lin and America's “New Export”
On 22 February 2012 former Obama Administration Economic Advisor, Austin Goolsbee wrote an op-ed in the Wall Street Journal asserting that the sports memorabilia resulting from the sudden fame of Jeremy Lin of the NY Nicks would substantially affect exports from the USA. Utterly inexplicable!!
I wrote and submitted a rebuttal with some explanation. I post it to demonstrate just how inept and out of sync with reality some of those in government can be, especially the academic leftist economists. It's impossible to know how they think. Rebuttal is below.
Austin Goolsbee's contention (WSJ op-ed 22 Feb) that “Linsanity” represents “America's New Exports” can legitimately be said to reveal his own mental condition – Linsanity without the L. His contention that the revenues resulting from Lin's popularity and like events will offset decreased exports of manufactured goods is nothing if not ridiculous. For decades, left-wing academic economists have been deceiving themselves, and the public as well, that “services” offset loss of manufacturing both domestically and in exports. In three decades manufacturing as percent of GDP has decreased by half to 11% today. Further, manufacturing employment in the USA now is only 9% of total, down from 21% three decades ago. Even that doesn't accurately reflect a real comparative condition since manufacturing is quite different from 30 years ago.
Moreover, the government data generators plug anything into the manufacturing component to inflate the ratio. The stretch to inflate it is epitomized by a publication in March 2010 by Clyde Prestowitz of the “Campaign for America's Future. He cited toilet tissue, plywood and catalogs as items we will always manufacture in the USA. Wow! It's difficult to take this as serious journalism. There is no mention of the long list of consumer commodities, both non-durable and durable, that are no longer produced in quantity in the USA. Included would be most apparel, most primary textiles (fabrics) and shoes as well as the machinery to make them. How about electronic goods, appliances, tools, and more? Yes, whole manufacturing industries have disappeared and others, such as steel and plastics, have been greatly diminished. Reasons for these losses are clear to those of us who have “lived” in manufacturing. However, the whole truth is never revealed for political reasons. This is a subject for another day, but many do not want to know the truth, especially about union excesses and regulations.
While “services” have been touted for decades as the savior of the American economy, history must be ignored and reality suspended to believe it. Even cursory analysis of our current national economic condition reveals a significant fallacy in such assertions. The financial industry now controls the economy as some with more credibility than I have written (John Bogle for one). Who is willing to deny the problems that such dominance has wrought.
In no way do I mean to discount the value of, and need for, strong financial and other services. However, one major problem differentiates today's national condition from the era when manufacturing was the underpinning of our economy. Fraud and corruption on a large scale is nearly impossible in manufacturing. It's easy, and clearly a problem, in the Financial Industry.
So, stretch reality and the truth as far as you can and there is no way that services, as Mr. Goolsbee and others speak of, can grow the GDP to provide the jobs and revenue to satisfy the voracious appetite of the current government for taxes. Nor will they increase exports adequately to even our current account imbalance – EVEN WITH LINSANITY EXPORTS. No kidding! The leftist economists ignore the reality of our import/export imbalance and citizens believe them. Sad, but true.
J. A. Mann, PhD
Williamsburg, VA 23185