I'm serious. In a front page article discussing the economy in Toledo, Ohio in advance of the primary there, the Post comments that: "median home prices here barely top $100,000, yet the city is in the top 20 in the nation in number of foreclosures." The "yet" should have been an "and." The point is that because home prices have not risen in Toledo, most recent home buyers have little or no equity in their home. This means that they can't borrow against equity to meet mortgage payments, and they don't lose any equity if the bank takes over their home. It would be surprising if they were a high rate of foreclosure if Toledo had just seen a run-up in house prices. It is not surprising to see a high rate of foreclosures in a city where prices have not risen much in recent years. This article includes other comments about the economy that are misleading or inaccurate. For example, it asserts that the average manufacturing worker in Toledo "earns" $68,000 a year. This figure seems implausible, since it is considerably higher than even the straight-time year-round pay of autoworkers at the domestic manufacturers represented by the UAW. (At $28 an hour, these workers would earn roughly $56,000 a year before over-time is included.) Most likely the $68,000 figure refers to total compensation which includes pension payments, health care benefits, and the employers' side of the payroll tax. It is misleading to compare this figure to earnings. The article also asserts in reference to trade that "short of erecting trade barriers that many economists and business leaders say would be self-defeating, no one seems to know what to do." Actually, most economists agree that the dollar must fall (as it is currently doing) to bring the trade deficit down to a sustainable level. A lower dollar protects domestic manufacturing in the same way that tariff barriers do. For example, if the dollar falls by 20 percent against the currencies of our trading partners, it has roughly the same impact as if we imposed a 20 percent tariff on all imports and subsidized all our exports with a 20 percent tax credit. It is remarkable that the article did not include a discussion of the value of the dollar. The rise in the dollar in the late 90s played a central role in the lose of manufacturing jobs in Toledo and elsewhere in the United States. The dollar's decline presents the best prospect for restoring health to the manufacturing sector.
--Dean Baker
