Audit Notes: Subpar Tom Friedman, Big Lie of the Crisis, Obama on Fraud

Today’s Tom Friedman column is even worse than usual:

In the past, workers with average skills, doing an average job, could earn an average lifestyle. But, today, average is officially over. Being average just won’t earn you what it used to. It can’t when so many more employers have so much more access to so much more above average cheap foreign labor, cheap robotics, cheap software, cheap automation and cheap genius. Therefore, everyone needs to find their extra — their unique value contribution that makes them stand out in whatever is their field of employment. Average is over.

But this is, of course, flat impossible. Average is just math, man, a function of the numbers of any specific group. Somebody has to finish first and somebody has to finish last.

Even in Davos, say, there are average oligarchs and there are median oligarchs and there are bottom 50 percent Davos oligarchs. These are probably the ones this very week suggesting Friedman really should title his next book of gibberish, “Average Is Over.”

I’d also note how he treats cheap foreign labor as a force of nature rather than a political choice made by an elite whose interests Friedman represents.

This line of thought is pretty revealing, actually. There will always be average people and worse-than-average people. How you think about and treat the majority of your population that are, by definition, losers and mediocrities says a lot more about you than your fortunate minority of winners.

— Bethany McLean’s is the latest to take on the Big Lie of the crisis touted by the GOP candidates that the government, via Fannie and Freddie and the Community Reinvestment Act, caused the housing crisis. She calls this the GOP presidential candidates’ “faith-based economic theory,” which is how I’ve thought of it too, writing this a few weeks ago:

This falsehood has taken hold on a big chunk of the right, which is fighting a rearguard action against the notion that markets can have catastrophic failures. Fundamentalism is kind of a problem when facts on the ground clearly disagree with ideology. Does…not… compute.

Here McLean responds to the argument that the SEC’s recent lawsuit against Frannie execs proves they caused the crisis:

But the SEC’s case doesn’t prove anything of the sort, and in fact, the theory that the GSEs are to blame for the crisis has been thoroughly discredited, again and again. The roots of this canard lie in an opposition—one that festered over decades—to the growing power of Fannie Mae, in particular, and its smaller sibling, Freddie Mac. This stance was both right and brave, and was mostly taken by a few Republicans and free-market economists—although even President Clinton’s Treasury Department took on Fannie and Freddie in the late 1990s. The funny thing, though, is that the complaint back then wasn’t that Fannie and Freddie were making housing too affordable. It was that their government-subsidized profits were accruing to private shareholders (correct), that they had far too much leverage (correct), that they posed a risk to taxpayers (correct), and what they did to make housing affordable didn’t justify the massive benefits they got from the government (also correct!). Indeed, in a 2004 book that recommended privatizing Fannie and Freddie, one of its authors, Peter Wallison, wrote, “Study after study has shown that Fannie Mae and Freddie Mac, despite full-throated claims about trillion-dollar commitments and the like, have failed to lead the private market in assisting the development and financing of affordable housing.”

— I like how The New York Times handles what is a transparent PR stunt from President Obama’s State of the Union address on how he’ll (finally) get tough on financial fraud.

Obama says he’s going to form a task force to tackle the problem (emphasis mine):

In his State of the Union address, Mr. Obama also said he would ask the attorney general to establish a special financial crimes unit to prosecute cases of large-scale financial fraud.

It is not clear how that effort would differ from the Financial Fraud Enforcement Task Force, a cross-agency group that Mr. Obama established in November 2009. Its mission, as the White House put it then, was to “hold accountable those who helped bring about the last financial crisis and to prevent another crisis from happening.”

Those are the second and third paragraphs of the story. Nice.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum.