Looking through The Atlantic’s year end chart extravaganza, I noticed they were kind enough to solicit help from a diverse set of ideological backgrounds. Yet for someone like myself this is also a good example of how think tanks can be as biased and misleading as anyone else.
From the Heritage Foundation:
With which came this accompanying quote:
“Greece, Italy, Spain and other countries are suffering from a financial and economic crisis – fueled by unmanageable debt and monetary policy failure – that will surely affect the U.S. economy. As this graph shows, debt held by the public in the U.S. totals about 70 percent of the economy. For the U.S. to avoid going down the same path as Europe, Washington must curb federal spending.” — Emily Goff, Research Assistant, Thomas A. Roe Institute for Economic Policy Studies, Heritage Foundation
There is something wrong with this analysis. It’s misleading and wrong. All of those countries are in their respective situations for very different reasons. And while they are correct to include the failure of monetary policy, most of these situations are not primarily fueled by unmanageable debt. Countries in the Euro zone are facing difficulties because of a weak central bank unwilling to perform the role of a traditional central bank, as well as massive liabilities in Greece that affect private banks in other countries. Yet Italy has a manageable debt load. Japan has had a high debt load for some time now, and is not even facing a crisis that would warrant being included in this graph. I don’t even know why the UK is presented, other than perhaps to include a familar face. The only two countries that even fit the diagnosis they are prescribing are Greece and Portugal.
Which means this is simply a fancier way of scaring you into thinking we are Greece and that only their preferred policy objectives are the solution – which, by the way, might actually make things worse.