With hat tip (sort) to Greg Mankiw, let’s look at the entirety of Senator Clinton’s letter. It is a sort of hat tip as Greg Mankiw took a cherry picked quote and distorted the message that the Senator was trying to give:
we can too easily be held hostage to the economic decisions being made in Beijing, Shanghai and Tokyo.
Mankiw calls this “excessively alarmist and a bit xenophobic”. But the speech was not xenophobic. Maybe Mankiw’s problem was that it was rather critical of Bush’s fiscal policy:
In terms of our fiscal stability, we are in uncharted waters. Markets, to a certain degree, will always be volatile, and to a great extent we are fortunate that our domestic markets are deep enough to absorb certain shocks. But there is no precedent in U.S. history for an economy as large as ours to be as heavily in debt to its trading partners as the United States is to countries like China, Japan, and others. When it comes to the fiscal recklessness and economic fatalism of the current Administration, the writing may not be on the wall, but yesterday the writing was on the Big Board. In the face of this challenge, the economic policies of the last six years have contributed to an erosion of U.S. economic sovereignty and have made us more dependent on the economic decisions of other nations. As I have proposed, and continue to support, we need to take steps to restore fiscal responsibility and sound economic policies based on the facts, not ideology. I will continue to support legislative steps to require that the Bush Administration address mounting fiscal and trade imbalances.
In case you are wondering about the “trade imbalances” part of this, the Senator endorsed trade and did not call for protectionism. Look – Dr. Mankiw has every right to criticize what Democrats propose for economic policy. But he also has the obligation to be honest about what those who he criticizes actually said.
Update: Jerry Bowyer joins Greg Mankiw in some good old fashion Clinton bashing. He starts by comparing the Senator to Lou Dobbs and Pat Buchanan. If that’s not stupid enough for you – check this out:
But I’m not sure they’ve really thought things through. After all, if a ten percent drop in the SSE, yields a three percent drop in the Dow, what would taking China completely out of the economic picture do? In other words, if the sino-screechers are right that trade with China leaves us vulnerable to downturns such as this week, then doesn’t that require them to believe that the run-up was due to the trade to begin with? If trade with China is to blame for the value lost on Tuesday, than it gets the credit for the value that was there before?
As with most of what Jerry Bowyer babbles on about – we have to wonder if he has thought things through. Bowyer continues that the world is an interdependent place. Fine – but go back and read the title of our link to the Senator’s letter:
In Remarks on Senate Floor Senator Clinton Urges Action to Address U.S. Foreign Debt and Trade Imbalance
Being in an interdependent world does not mean one goes out and spend and borrows as if there are no consequences. Then again – no one apparently bothered to tell President Bush that. Which of course is the Senator’s point. Now mind you I’d never expect Jerry Bowyer to get the simple point, but a Harvard economist should be able to.