Tom Friedman Peddling Nonsense Again

Dean Baker does a great job of educating Tom Friedman on economics.  Friedman, however, does very well for himself without Dean Baker's help.  His stories usually begin with some wisdom that he has picked up during a casual conversation with a taxi driver, or with someone else that he has met on one of his frequent trips around the globe.  This sort of information inspires him to write learned articles on any subject that interests him.  Unfortunately, the New York Times is only one of many sources that is eager to publish his gibberish.  He writes well, and he tells a good story, but he is a writer of fiction.  He tells us that Apple has $137 billion in saved profits that it is not spending because it is uncertain about what government might do.  He doesn't tell us that $82.6 billion of Apple's cash hoard is held overseas and that Apple, along with other multinationals, is waiting to see whether the government can be persuaded to grant a tax holiday which allow it to repatriate their earnings without paying US taxes.  He also fails to explain why Apple, and other US multinationals,  are so concerned about US fiscal budget problems and the cost of US entitlement programs when more than half of their profits come from international sales.

Friedman must also watch the Sunday News shows that give politicians an opportunity to display their "wisdom".  Paul Ryan argued that he was not a proponent of fiscal austerity.  He told the TV audience that his policies were designed to promote economic growth.  They would restore business confidence which would enable us to afford Social Security and Medicare.  Friedman offers his suggestions for increasing business confidence and stimulating economic growth.  Dean Baker points out that our lack of demand has more to do with our trade deficit than with anything else.  Business investment and consumer spending are consistent with historical trends.  Our huge trade deficits, however, are subtracted from aggregate demand.  That is why we have an aggregate demand problem.  We had a stock market bubble, and a real estate bubble, which allowed us to run huge trade deficits without have recessions.  Our trade deficits are not sustainable without finding another source of aggregate demand.  That is not something that Tom Friedman,  and most US politicians, want the public to understand.  They tell us that the trade deficits have nothing to do with budget deficits, or with unemployment.  Unmanaged globalization is great for everyone.  Everything would be fine if we just had a better educated workforce.  They don't explain how our highly educated workforce can compete with other highly educated workers who will do similar things for much lower wages.