Pulitzer prize winning journalist David Ignatius recently penned an article in the Washington Post titled, An Economic Boom Ahead?, in which he suggest that much of the recent worry over the economy is misplaced and that the coming years may see significant financial gains. He notes that the US is nearing a “tipping point” where it will be more economical for companies to “reshore” factories back to America.
To support his argument, Ignatius cites a study by Boston Consulting Group (an elite insider company if there ever was one, with former and current employees including Mitt Romney and Benjamin Netanyahu). What exactly is this “tipping point” they describe? What change has suddenly allowed American labor to become competitive again? Ignatius doesn’t say and neither does the Boston Consulting Group’s memo he references, but reading between the lines it’s obvious Ignatius is talking about the fall of real American wages over the last few years and decades. It’s a stupid argument, but this line of reasoning sounded familiar to us, so we began to think, where have we heard it before?
Apparently the White House agrees with Ignatius; of course the fall of the dollar is wonderful for American businesses! They agree so much they published a very similarly styled article last January titled Investing in America: Building an Economy that Lasts. The government memo notes that falling wages may soon reap benefits.
Since 2000, wages have stagnated and, when adjusted for inflation, have actually declined. The Brookings Institute notes that “in 2009 the median full-time male worker aged 25-64 brought home $48,000—roughly the same as in 1969 after adjusting for inflation.”
Millionaire hedge fund manager and founder of Hayman Capital Management Kyle Bass confirmed that the government’s unofficial position is to continue this trend and “kill the dollar.” Speaking at an investor conference in 2011, he said:
“The government’s idea right now is we are going to export our way out of this. When I asked a senior Obama administration official last week how we were going to grow exports if we won’t allow nominal wage deflation, the official said the government is ‘just going to kill the dollar.’”
The second part of Ignatius’s thesis is that new energy sources coming from natural gas development will significantly improve the economy (never mind that energy company profits virtually never trickle down to the consumer level.) He writes, “The natural-gas boom will mean a dramatic change in energy imports and, thus, the security of US energy supplies.”
That’s interesting because the White House memo also addresses the growing use of fracking and natural gas as a net positive for national security and private growth, just like Ignatius does. The White House memo says, “The discovery of new natural gas reserves, such as the Marcellus Shale, and the development of hydraulic fracturing techniques to extract natural gas from these reserves has led to rapidly growing domestic production… The potential benefits to the US economy are substantial.”
The memo even uses the Boston Consulting Group’s “findings,” again, just like Ignatius. Well, isn’t this a nice little circle jerk of propaganda they’ve made for themselves?
In a recent Foreign Policy Magazine post titled, Who’s Whispering in David Ignatius’s Ear?, the author writes that Ignatius’s insights into diplomacy with Iran “seem especially well-sourced of late — it’s almost as if he has a weekly lunch with [National Security Advisor] Tom Donilon or something.” He concludes, “If you want to know what the Obama administration is thinking, read David Ignatius.” Indeed, especially since they seem to be producing nearly identical reports!
The government’s attempt to hide the true cost of being competitive with China’s slave labor isn’t unexpected, but a writer for the Washington Post should have a more measured response. At the very minimum, he should explain what labor competitiveness really means. Instead he hides behind friends and industry experts who say how wonderful it will be when a $15 an hour factory job is the equivalent of today’s minimum wage.
Maybe it’s not fair to say with certainty that Ignatius is taking his queues from the White House website or establishment think tanks. Maybe he really does believe sinking the US dollar will improve employment prospects and gains in the energy industry will trickle down to the rest of us.
Then again, maybe Ignatius himself is what’s wrong with the establishment press. Maybe his unwillingness to challenge the orthodoxy of the state and corporate propaganda complex is the real problem.