Sunday, October 30, 2011

The letter The New York Times didn't want you to read

...presumably because their editorial standards wouldn't countenance it (and understandably so), but still I'm too lazy to let anything go to waste. Basically I was just trying to say that Livingston's argument couldn't survive the fact that he was confusing correlation for causation and effect for cause. Still, I appreciate his attempt to lend a new perspective; it's just that his has holes you can drive a truck through - and that's something both of our pieces seem to have in common.

To the Editor:

In "It's Consumer Spending, Stupid" (Op-ed, Oct. 26, 2011), James Livingston offers a provocative but ultimately confused take on our economic woes. Business investment's shrinking share of GDP is better understood as improvement over time to capital efficiency (compare the cost difference of launching Google or Facebook to earlier counterparts such as GE or Ford). Furthermore, elevated corporate cash balances were a reaction to, not a cause of, the bursting housing bubble and ensuing credit crunch.

His concerns about economic justice are admirable, but it’s counterproductive to pit profits against wages, as not only do they not stand in conflict (most companies cannot sustainably grow profits without increasing payroll), but pension funds and 401(k) plans are among the biggest shareholders. Indeed, while recent events have highlighted serious flaws in corporate governance, concerned citizens should look to their considerable collective power as owners, not workers or voters, to effect real change.  

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