Bowyer Intentionally Misleads in Exchange for Payment.

They call them “talking heads”.  On almost every news show a so-called “expert” is presented to comment on the current topic being presented.  When Gabriel Giffords was shot, news agencies hauled in brain surgeons to discuss brain injuries and possible recovery scenarios.  During coverage of wars, politicians, generals, former generals and others are brought in to discuss weaponry and war strategy.

These talking heads seem to be in abundance on opinion oriented talk shows.  Hannity, O’Reilly, Greta Van Sustren…  They usually have them piped in from a studio in another city, but on the Sunday morning talk shows they usually have them all sitting together.

One assumes that the so-called experts are speaking of their own volition what they truly believe based on the available facts.  On hotbed political issues one assumes that politicians and their supporters will spin facts and argue their bent to the advantage of themselves and/or their political party.

But you would never assume that any of these guys are taking a certain position simply because they’re paid by the host to do so.  That would be pretty low.  In a recent column entitled “As Its Ratings Slide, The Confessions Of A Recovering CNBC Pundit”, Jerry Bowyer admits to doing just that.

In his column, Bowyer claims to have been a paid CNBC contributor for two years, 2008 and 2009.  In his column he makes it seem like Fox Ness and CNBC were fighting each other to get him to be a talking head on their networks.  After puffing himself up quite sensationally, he reveals that most of his appearances were on Larry Kudlows “Kudlow Report”.

“My job,” he writes, “was to come on the air and make the bull case.”

He says that Larry Kudlow was bullish on the economy even into 2008 and 2009 when the rest of the civilized world was well aware that a recession had arrived.  Bowyer claims that he himself was “very bullish” to about the middle of 2007.  But that didn’t stop him from arguing the bull case even though.

He describes how Kudlow was always “looking for the bull case”.  When the show had other talking heads who did not agree with Kudlow’s ignorance, Bowyer was called on to “body check them”. “I was willing to do that,” he writes.  Bowyer describes his years as a paid “contributor” as bending his mind and principles to continue in Kudlow’s good graces and get publicity “continuing to automatically look for the bull case even after the bull case was no longer the strongest case.”

I’m going to put forth my opinion here (and, mind you, I’m not getting paid for it) and say that it is my belief that Bowyer didn’t bend his principles solely for the money.  He did it to get on television where he could inflate his ego pretending to be an economic expert.

A Comedy of Myths

Peter Ferrara is a graduate of Harvard Law School and holds various positions including Senior Advisor for Entitlement Reform and Budget Policy at the National Tax Limitation Foundation and Senior Fellow at the National Center for Policy Analysis. He served in the Reagan administration and the first Bush administration.  He’s also clueless.

In a recent column a Forbes dot com http://tinyurl.com/cwt7kay Ferrara sets out to debunk what he believes are fiscal policy myths.  Some of the myths Ferrara claims to debunk were never really myths in the first place. Maybe Nancy Pelosi passed some of them on to her constituents in a lame attempt to smear an opponent. It is true that both parties have a few Todd Akins and Louie Gohmerts who are clueless, classless and beyond correction and hold some wacky beliefs, but for the most part, the so-called myths debunked [sic] by Ferrara are hardly widely embraced.

One such myth is the notion that Keynesian policy includes a belief that increased government spending stimulates the economy during recession. This is not true.  Keynesian theory does not hold that Government spending stimulates the economy, but fiscal policy can and does stabilize the economy.

The Obama stimulus [sic] is a good example of this. It stopped a freefalling economy. It prevented a lot of people from losing their jobs. Did it stimulate economic growth? No way. Take a look at the cash-for-clunkers program. During the program, sales of new cars jumped noticeably, but when it ended sales of new cars tanked again. The program had an undeniable effect. However, it didn’t stimulate any economic growth.

Another myth propagated by Ferrara is the blatantly ignorant belief that the money supply is fixed. Ferrara nails this one: “If the government spends more, where does the money for that increased spending come from? Either from increased borrowing, or increased taxes, which both take an equal amount of resources and spending out of the private economy as they finance in increased government spending.” This is ridiculous. The Fed can and does create money out of thin air. Everyone knows this except those that fell asleep during Intro to Monetary Policy class.

[There is the threat of inflation when the Fed does this. However, the Fed’s actions only increase the monetary base. In a recessionary deflationary economy, that doesn’t lead to inflation. There is a risk of inflation in the future, but that can be easily addressed when the time comes.]

Here’s another one: “Demand can never be inadequate in a market economy. If the demand for any product or service is not strong enough, the price of the good or service will fall, until demand equals supply.” The actual statement is theoretically true (except for the Jessica Simpson Christmas CD a few years ago – they couldn’t lower the price enough to sell them so they ended up shit-canning tens of thousands of dollars of product), but Ferrara uses it to argue that a shift in aggregate demand does not affect economic growth.

In fact, in 2007 the aggregate demand curve began a long migration to the left, and it is this low aggregate demand that is the primary reason the economy isn’t growing. People are too indebted with underwater mortgages, student debt and consumer debt. This reduced the quantity of goods and services they can purchase at any given price level thereby affecting the quantity of goods and services supplied. I mean come on. Why produce more cars, houses or other products when consumers can’t or won’t purchase them?  This is actually a widely held belief among supply-siders and appears in a 2004 book written by Stephen Moore and Arthur Laffer.

And another: “The people can never spend more than they produce…” This is stupid because the U.S. has been spending more than they produce for nearly the past 3 decades. We’ve gone from the world’s largest creditor nation to the world’s largest debtor nation using mortgage debt, credit card debt and other borrowings to finance the appearance of prosperity. As I mentioned earlier, the major factor holding back the economy is the overwhelming consumer debt.

Ferrara continues (he’s on a roll, baby): “And they will never spend less than they produce, leaving demand inadequate, for they will either consume or save every dime that they earn or produce. The consumption goes into consumer spending, and the savings goes into capital spending.” The fact is that not all savings goes into capital spending especially right now. Banks and businesses are sitting on assets. The reason they’re sitting on cash and not investing was already mentioned above. With consumers so deeply in debt from spending more than they produced for so long, investment in new production is not expected to reap a high return.

One thing that Ferrara does get right is this: “Another myth is that raising tax rates will not harm the economy”. But this is another one of those things that everyone really does agree with. Raising taxes can have a significant adverse effect on the economy. In dispute is the degree of the effect. Reducing a marginal tax rate from 70% or to 28% has a significant effect. When people raise the argument that raising a tax rate from 35% to 39% might not have such a dramatic effect on the economy, they have a valid point.