Harper's: economics and editing

Over the years, I've sent a number of letters to the editor of Harper's. It's usually just an exercise in venting. But they have published two of my efforts, including one last month. I've subscribed for over a decade now-- and enjoy the magazine (especially since it provides some cool stuff that I can't find anywhere else). But it's stuff on economics and politics (especially from the lead editoralist) ranges from insightful to inane, from banal to buffoonery.

In any case, I thought you might get a kick out of my original letter and the (heavily) edited letter that appeared in the August 2007 issue. Some of the edits do a nice job in correcting my grammar and tightening the presentation; but other edits/deletions seem to move my view into a closer line with Harper's worldview (and look how they butchered my school's name!).

The Original:

Dear Editor,

I have enjoyed Harper's for many years but have grown used to skimming and then usually skipping Lewis Lapham's incoherent discussions of economics. Aside from Lapham, the economics in Harper's is a mixed bag. But I was surprised to read the critique of Dean Baker (an economist?) about the Bush economy. While there is (so very) much to criticize about economic policy under Bush and his Congresses, Baker exaggerates blame on Bush in the two areas he chooses to critique, misses larger concerns, and repeats common misunderstandings about a key economic concept.

First, Bush has little impact on the value of the currency and the size of the housing bubble. On the latter, Baker admits as much when he blames Bush and then immediately talks at length about Alan Greenspan. On the former, Baker blames Clinton and then notes that the dollar has depreciated since 2002. So, why blame Bush?

Second, why not critique Bush and his Congresses at length for increases in the national debt and massive increases in all categories of government spending, failure to pursue substantive educational reform (by injecting competition into a system dominated by a government monopoly), his protectionist pandering to special interest groups, the Keynesian half of the two tax cuts, and so on?

Third, Baker continues the media's inordinate (negative) focus on the trade deficit in goods and services without mentioning the subsequent trade surplus in investments. (That's why they call it the "balance of payments".) If we import $500 billion of goods and services from country X and export $400 billion to them, what happens to the other $100 billion? Typically, those who hold dollars invest the other $100 billion in American businesses and governments. In fact, our country's investment surplus may well be a sign of economic health. This is borne out by the historical record. It is also indicated intuitively by the willingness of foreign investors to invest in our economy, given the risks and rates of return available in the market. (If you were a worker in Spain or Argentina, where would you invest your retirement funds?)

D. Eric Schansberg
Professor of Economics
Indiana University (New Albany)

The Edited Version:

Although the Bush administration's economic policy deserves much criticism, Dean Baker exaggerates Bush's impact on the value of the currency and the size of the housing bubble. On the latter, Baker admits as much when he writes at length about Alan Greenspan. On the former, Baker notes that the overvalued dollar is a legacy of Clinton, and that the dollar has depreciated since 2002. Why, then, blame Bush? Instead, criticize Bush for increasing the national debt and government spending, and for his protectionist pandering to special interest groups.

Baker also writes about the trade deficit in goods and services without mentioning the subsequent trade surplus in investments. If we import $500 billion of goods and services from a country and export $400 billion to it, what does the country do with its $100 billion surplus? Often, it invests those dollars in American businesses and governments. In fact, our country's investment surplus may well be a sign of economic health.

D. Eric Schansberg
Professor of Economics
University of Indiana Southeast