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Facts Behaving Badly: Economics Edition

(To read other “Facts Behaving Badly”, please click here.)

I want to open this post up by explain how you should go about finding a “Fact Behaving Badly”.

Step 1: Hear a fact. If you hear an incorrect fact once, it can’t do too much damage. But if you hear it more than once, from multiple sources, move to step 2.

Step 2: Ask yourself, is this fact too good to be true? Too ideologically perfect? Could a political consultant have designed this fact? If yes, move to step 3.

Step 3: Google the fact. Or go to snopes.com.

For example? The other day, a co-worker of mine told another co-worker the story behind his space pen. NASA spent over a million dollars engineering a pen that would work in space. Do you know what the Russians used?

A pencil!

Having heard this story more than once, I asked myself, “Man, this story sounds way too anti-government to be true.”

It isn’t. Almost nothing in the story is right.

NASA used pencils--mechanical pencils, not wooden pencils, because of the fire risk--for years. But “because of the substantial dangers that broken-off pencil tips and graphite dust pose in zero gravity to electronics and the flammable nature of the wood present in pencils” NASA looked for an alternative. The inventor of the space pen developed it independently, as a marketing gimmick, and gave samples to NASA. After testing the new pens, NASA bought them from the entrepreneurial inventor. Within a few years, the Russians adopted the space pen as well. (H/T to Snopes and the Space Review for the debunking.)

Ironically, the space pen is the ultimate example of entrepreneurial capitalism.

Perhaps you heard about those $16 muffins the Department of Justice bought a few years ago? Yeah, not true. What about the $200 hammers? The $600 toilets? Or the $10,000 coffee makers? (H/T to Freethoughtpedia.) Mostly, the media takes complex items--a combination tea maker/coffee maker/soup warmer designed to work at high altitude in the cramped confines of a bomber--and re-dubs them as something simpler--a coffee maker!--then runs the story under a breathless headline decrying government waste. (If you bought these myths, don’t feel bad; newspapers repeat them all the time. The $16 muffin tricked The LA Times, CBS and CNN, along with 178 other news sources.)

Some facts behaving badly are true, if you don’t caveat them. According to this guy, NASA did technically spend $10,000 on a toilet. But as the website points out, that kind of makes sense when failure--zero gravity fecal matter everywhere--could cost lives.

With all this talk of money, Michael C and I got in the mood to share five somewhat-foreign-policy-related economic “Facts Behaving Badly”.

Myth 1: China owns all of our debt.

Yeah, not so fast. Pundits, politicians and comedians have repeated this claim so many times that most Americans now accept it as gospel. Except China doesn’t own all of our debt. They don’t even own half of it. China has, approximately, 8% of the U.S. debt, (at the time of this writing) an amount so low I’m not sure the average American would ever guess it. Indeed, foreign governments, in total, only own 32% of the U.S. debt.

If China doesn’t own our debt, who does? The super rich. I’ll let Robert Reich take it away, “This huge structural change in how America's rich finance government--from paying taxes to lending money--has gone almost unnoticed.”

Myth 2: America Imports Most of Its Oil.

No. “The U.S. now imports 45% of its petroleum, down from 57% in 2008.” So the word “most” no longer applies.

Myth 3: America gets most of its oil from the Middle East.

Again, no. Most of the rest of that oil doesn’t come from the Middle East. In fact, 69% of our oil imports come from five countries. Only one--Saudi Arabia--is Middle Eastern; three of them--Canada, America’s biggest oil importer, Mexico and Venezuela--are North or South American.

(This great Politico article debunks some other gasoline myths.)

Myth 4: America must become “energy independent”.

Even if America did, it wouldn’t lower the price of gasoline. Why not? Well, Canada went “energy independent” years ago, and guess what? They still sell their oil on the international market. America has been “agriculturally independent” for years, but still sells its agricultural products on the world market too. To hear why, listen to NPR’s Planet Money.

Myth 5: America no longer makes anything.

Let’s watch an ABC series on buying American-made goods. Man, American manufacturing sure has plummeted!

Except, as this article by MSNBC, or this story by NPR’s Planet Money, or this other NPR piece, or this CATO blog post, or even this news article from...ABC itself?...explains that America still leads on manufacturing. And even when China passes America, America will still only be in second place.

The great change between the past and present is the number of manufacturing jobs. Frankly, American productivity has increased tremendously from even ten years ago. Productivity, and ergo profitability, have skyrocketed, while companies outsourced low wage/manual manufacturing to cheaper overseas factories or robots. This is an issue of what types of jobs and at what rates people are willing to pay for goods. But this shouldn’t mean America dives into protectionism over manufacturing.

eight comments

Though I wonder why an ‘Economics Edition’ would appear on ‘a blog on counter-insurgency warfare, military and foreign affairs, art, and violence,’ it’s good to see independent bloggers argue against news agencies that suppose themselves independent. Generalizations on Asia, the Far East to the Middle East, have been a problem for decades. It surprises me how many are still saying that the Central Intelligence Agency made the Việt Minh the Việt Cộng and the Mujahideen the Taliban. I saw another xenophobic advertisement claiming that ‘China owns all of [Americans’] debt,’ so I shut the television.

@ Austin – In general, we felt like each of these myths had a foreign affairs, international relations aspect to it.

yeah Austin mainly because each of these “economics” myths relate to international economics. So America’s position in the world with regard to manufacturing, where we get our oil (and oil has become the trendy cause for all past and future wars, even though its way more complicated) and who owns are debt, which other people hint could cause a future war as well. So that’s what we were going for.

Fair enough. It’s good to see coverage either way.

And beware of another myth swinging your way: you have used NPR as the source of your myth busting primarily. I’m surprized someone hasn’t slammed you for that. How could those liberal government money grabbers at NPR render a non-biased report? :-) Smiley faced emoticon meaning screamers at truth are loud people…

Derek, three of this posts’ twenty-five links cite NPR. I hardly see 12 percent as ‘the source of [Eric and Michael’s] myth busting primarily.’

OKay smart guy who-has-time-to-count links, you missed the point completely. Sorry for me saying “NPR…primarily”. I really meant to say “left-wing East Coast pinko liberal Lame Stream Media”.

Yeah I think Derek was being sarcastic. Anyways, for a larger point, if anyone can find a source that does more in-depth investigative journalism than the public sources, let me know. (60 Minutes is the best I can come up with, but PBS has Frontline so it seems like a wash.)