Daniel Gross Is An Idiot (Part Two In A Series)

The Gawker Empire (the mothership, as well as loved-or-hated Wonkette) has their much-publicized obsession with Drudge. And the guys at Kos hate pretty much everybody. So we asked ourselves, why can't a small-time operation like ours develop a largely-imaginary rivalry with another online outlet? While searching for a suitable target, Daniel Gross landed in our lap.

We read Gross's column, Moneybox, on Slate regularly. It's alright - mainly we admire it for attempting to deliver real economic analysis to liberals, who tend to be largely ignorant on the subject. (Your author, a liberal economist, is a rare breed indeed.) Moneybox's author, on the other hand, has been particularly idiotic of late. When he insisted the housing bubble was a good thing for the economy, his profound shortsightedness nearly gave us the vapors in the wake of our own sound review of the matter.

So when Gross suggested this afternoon that the current "savings glut" among U.S. corporations was a problem SO BIG it was the root of global trade imbalances, we were intrigued but ultimately reassured of our evaluation of the guy as an idiot. Gross writes,

...[M]aybe the real problem isn't the frugal Chinese. Maybe it's frugal CEOs. It now appears that there is another savings glut right here in the U.S.A. In the past several years, instead of spending cash on hiring, new machinery, R&D, or dividends, CEOs have just been sitting on it.

I'm sorry? What problem? They're sitting on cash because they absolutely, positively need to. Nobody knows what's going on. People can't find a good way to invest their money. Our economy has been and is currently in a period of fundamental change. Say it however you want to say it. That "excessive" saving by foreign governments and investors? It's real, and it's probably what's been propping up Gross' precious housing bubble by tamping down interest rates.

CEOs are sitting on cash because they're confused, and not least because they got their asses handed to them, correctly, for doing wildly inappropriate things with their cash. Gross seems to think that any economic situation can be dramatically improved by spending more money. He's kind of like a Keynesian on crack. Money will (hopefully) get spent when the dust settles and we figure out where it can be counted on to stimulate real growth. People who believe and act otherwise sure will be entertaining to watch in the coming years, though.

Which is why we'll keep reading, Daniel.