D&S Debunks the Myths!

The Collapse of the Asian and Russian economies may have caught The Wall Street Journal off guard, but not readers of Dollars and Sense. If you'd been reading Dollars and Sense for the past year, then you'd know the facts behind the myths of globetrotting, go-go capitalism:

Myth #1: In a robust economy like this, anyone can get a job.

Fact: Government unemployment statistics leave out anyone who is too discouraged to look for work, or who has a part-time job but wants a full-time one. Including them would more than double the unemployment rate, to around 10%. For black men, the situation is far worse: By correcting for their undercount in the census and counting the 800,000 in prison, the unemployment rate for black men becomes a horrific 25%! ("Black Men Still Jobless," Nov/Dec 1998, and "Job Stats: Too Good to be True," in Real World Macro: A Macroeconomics Reader from Dollars and Sense, 1998.)

Myth #2: Stopping global warming will bankrupt the economy.

Fact: By building cleaner, more efficient vehicles, promoting public transportation, and using alternative fuels, the nations of the world can stop catastrophic climate change. While auto companies and the energy industry may lose money in converting to new fuels, U.S. drivers will actually save billions per year in lower fuel bills. ("Who's in the Driver's Seat?" July/Aug 1998.)

Myth #3: Throwing more money at public schools won't fix education, since only private enterprise and family values can save failing schools.

Fact: Reading scores for elementary and high school students more than doubled in Kentucky after the state, under court order, boosted funding for schools by 42% between 1990 and 1994. The money was directed to train thousands of teachers, set up before and after school programs, and help institute curriculum changes. The money also narrowed by 52% the funding gap between the richest and poorest school districts. ("Underfunded Schools: Why Money Matters," March/April 1998.)

Myth #4: Employees won't work hard without strict, well-paid bosses overseeing them.

Fact: U.S. companies employ three times as many managers and administrators as its closest rivals Japan and Germany, with huge income disparities between managers and average workers. But while U.S. companies assume that efficiency requires lots of well-paid managers to keep poorly paid workers in line, studies actually show that profit sharing and employee participation in workplace decision-making pays off with higher productivity! ("Dr. Dollar: Why CEO Salaries Skyrocket," Nov/Dec 1998, and "Why Economists Are Wrong About Coops," Sept/Oct 1998.)

Myth #5: Private companies can do a better job running Social Security than the government.

Fact: Wall Street firms would be the main winners from privatization, charging high fees for managing our investments and paying out the money once we retire. Due to swings in the stock market, workers would face the risk of ending up with far less money than they had expected. A private system would also reduce or eliminate death and disability insurance for workers' families. ("Wall Street's Fondest Dream: The Insanity of Privatizing Social Security," Nov/Dec 1998.)

From Dollars and Sense website: http://www.igc.apc.org/dollars/myth.html