Media Criticism

A recent interview between Foreign Policy magazine and economic scholar Allan Meltzer should be ready by anyone who holds on to the notion that the economy will be fine in the short term. Meltzer describes a scenario where the Federal Reserve is reliving the oscillation of the 1970s between a primary concern with inflation to an equal concern for unemployment. Meltzer’s assessment of the overreaching of Congress as well as the subservient nature of the Federal Reserve is spot-on in explaining our economic woes.

Meltzer attributes the current economic downturn to deregulation of private finances and the Federal Reserve’s response to public pressure with interest rate decreases. It is clear that Meltzer’s first point follows the historical path of America’s economy going back to our origins. The notion of a Federal Reserve was argued within Congress and political circles going back to the Reconstruction period. The debate over the use of gold or silver as a primary financial tool in America raged at the end of the 19th century. These debates do not take place today because we are more comfortable with credit cards, fiat currency and a federal government that shuffles papers during economic hard times.

The latter point by Meltzer shows the lack of independence by “independent�? bodies within the federal government. The Federal Reserve should act as an independent arbiter of America’s finances in the same way that the Supreme Court is designed as an insulated judicial body. The larger point, however, is that the Federal Reserve cannot solve all of our economic problems. We need to deal with state and federal budget deficits as well as household budget problems to get the economy back on stable footing.

I do not plan on spending my rebate check on shoes, jeans, groceries or any other consumable items that the government would like. I have to go back to the word “rebate�? and point out the fact that we will have to pay off this “rebate�? in successive years with interest. This cash advance on the national credit card won’t help the economy because there are millions of people like me who have at least $600 of debt to pay down.

As a freelance writer, I have a significant amount of self-employment tax to pay as my annual income increases. I will pay down this tax debt with my rebate check which means the government is giving me a gift card for the Internal Revenue Service. I am sure the representatives and senators I contacted about this ridiculous stimulus package won’t be happy to know that their check is coming back to pay off my tax liability.

I have considered making a large payment on my credit card or student loans with the rebate check. The winner in my personal rebate battle is investors who have put their money in the lender that allowed me to get an education. These investors and lenders would win anyway because they have such large financial resources that they will be able to deal with the brunt of a recession.

The third option I have for the rebate check that will come well into our looming recession is sending it back to the government. I can scroll a long diatribe against wasteful spending across the front and return to sender. I am sure quite a few people will think this act is a sign of insanity but I think it is a great idea if you want to send a personal message.

The whole point of this post is that the economic stimulus package is akin to throwing a rock at an oncoming tank. I know Congress is eager to spend our money without reconciling the books so I think we should see something tangible from this spending. We should see improved highways and infrastructure to decrease the consequences of natural disasters. An investment in science and math education that makes the next generation of students ready to deal with 21st century problems would help our country in the long run. A portion of this money could be spent on alternative fuel investment, business incubators and other programs to revolutionize our economy.

I think we need to commit to one of two paths: investment in the challenges of the next generation or responsible spending. This choice seems to get lost in the mainstream media which assumes that our government will always be out of control. I don’t even want to get into the international issues of America’s debt in this post, I have already gone on too long.

Stefan Theil has written an indictment of the French and German educational systems in the January/February issue of Foreign Policy that expresses one of the fundamental problems with educational curricula. Theil is the European economics editor for Newsweek and points out the anti-capitalist rhetoric used in standard textbooks in the Old World. He speaks about educational language that discourages small business growth, encourages a reliance on the welfare state and helps continue the form of static economics that harmed both countries in the Cold War.

Theil points out THE issue in modern economics which is the dearth of instruction on economic systems. No economist would completely endorse mercantilism in this day and age but it is an important system to understand because it ushered in modern capitalism. Western economics teachers and professors may not like communism but their students need to know about the perversion of Karl Marx’s ideas. While French and German educators may not like capitalism, they are setting their students back by not providing a full picture of the modern world.

A generation of students who do not understand economic distinctions will become a generation of leaders who cannot speak the same language as their counterparts. I think the media, whether it is mainstream outlets or alternative sources, can play a role in fighting the isolation of economic education. Nightly news shows can stop placing blame and rewards for the global economy on a single individual or organization. Newspapers can provide tutorials on trade deficits, exchange rates and other economic issues that trickle down to the average consumer. Theil is correct in criticizing France and Germany but public education in the United States is suffering from similar problems. We need to expand economic education beyond the bounds of the classroom