There's not much on the business-news Internet more useless than Slate's Big Money site, where financial writers who couldn't hack it at SmartMoney or Bloomberg sweat desperately to run financial-news stories of the day through Slate's knee-jerk contrarian wringer, to the benefit of no one. (Updated to add: Actually, Big Money seems to be mercifully defunct. The article complained about herein was posted with the "Moneybox" brand.)
Today's example (heck, pretty much every day's example) is James Ledbetter, who today trudges to his keyboard to peck about how he is oh-so-exhausted of this tiresome worry that the U.S. is somehow turning into Japan.
Now, it is perfectly legitimate to argue that the U.S. is not turning into Japan. I'm not even sure I believe it myself. Ledbetter does list some of the legitimate reasons why the U.S. might not be Japan, in the less-edgy lower half of this story.
But as is so often the case with Slate articles, the top of the story and the kicker -- the icing on the bullshit cupcake, as it were -- undermine the entire piece's credibility by toiling to erect a large, shaky strawman that can be heroically chopped down.
In this case, the straw man is the idea, which exists not in reality but in the deadline-harried brain of James Ledbetter, that the very question of whether we're turning into Japan is purely a matter of political slant, and more specifically your ideology vis a vis fiscal stimulus:
Thus, the fear-Japan crowd splits into two basic camps: There are those who point to the Japanese experience to argue that stimulus by definition does not work—or is not worth the level of government debt that it creates. (This camp includes the Reason Foundation and just about any opinion published in the Wall Street Journal.) And there are those who think that we need to fear the Japanese scenario because Japan's stimulus was too little, too late. (Paul Krugman leads this camp.) It's almost comical to have advocates of two completely opposed financial strategies pointing to the same fearful scenario and saying, "We'd better not let that happen!"
Yes, I guess that would be almost comical, if it were based in reality.
The truth is that reasonable people, by which I mean pretty much everybody in the economic mainstream, agree that fiscal stimulus was useful, that the stimulus enacted last year may not have been large enough to create sufficient demand in the economy to avoid a weak recovery, that a second stimulus package will almost certainly be necessary as a result, and that if one is not forthcoming, then the deflationary deleveraging process currently gripping the economy will raise the risk of a Japan-like outcome.
There are lots of other things wrong with his analysis, including:
* His argument that the size of the preceding bubble has anything to do with the depth of the subsequent pain, which completely misses the point; it's not the size of the bubble that matters, but the size of the debt, and that is mountainous.
* His argument that four quarters of economic growth in the U.S. mean deflation can be avoided, which certainly does not preclude deflation; it didn't in Japan's case.
* His argument that the general tidiness of non-financial corporate balance sheets means we can avoid deleveraging ignores the messy balance sheets of everybody else (including the banking sector, which he rightly notes as a potential trouble spot at the end of the article, cutting off this leg of his argument).
But his main point, that the turning-Japanese debate is basically about political ideology, is completely pulled from his ass.
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