Last week I saw a Thomas Friedman column in which he promised to stop providing his misguided judgment on important public issues. Unfortunately, I was reading a parody. Friedman is still weighing in on major issues with his NYT column. Today he is trying explain the economic crisis. Apparently no one told Mr. Friedman about the housing crash. He thinks that people have stopped spending because of the plunging stock market even though the vast majority of families own little or no stock. Of course most people do own their home. The loss of more than $5 trillion dollars in home equity ($70,000 per homeowner) is the main factor explaining the falloff in consumption. Mr. Friedman's remedy to the economy's problem is to persuade people to go shopping. If he noticed the crash of the housing bubble, he would realize that people are unlikely to go shopping because they desperately need to rebuild their savings. Millions of people are approaching retirement with no pension, no saving, and no home equity. These people are not likely to go shopping despite Mr. Friedman's urging. Friedman is also unhappy about "left-wingers" who "think we can punish Wall Street while protecting Main Street." Well actually, it is very easy for people who know economics to design ways to punish Wall Street without harming Main Street. For example, we can keep the banks afloat while limiting executive pay to $2 million and prohibiting dividend payouts to shareholders. If Congress were just acting in the public interest, it is difficult to understand why it would pursue any other policy. The public has no interest in rewarding incredibly rich and incompetent bank executives with taxpayer dollars, nor the shareholders of these companies. It is especially striking to see Friedman's hostility to those who want to limit the pay of Wall Street executives. These executives can earn tens of millions of dollars a year. By contrast, in past years Friedman has used his column to rail against unionized textile workers who earn $12 an hour.
--Dean Baker
