Economists Blast McCain's eBay Economy
Two months after I first highlighted John McCain's prescription of eBay as the cure for what ails the economy, economists are finally weighing in. As Bloomberg reports, the feedback isn't pretty. While McCain, who has admitted knowing little about economics and even less about computers, may envision a nation of auctioneers, "new people selling stuff out of their closet on EBay isn't growing the economy."
That's the message from economist Betsey Stevenson, a professor at the Wharton School of Business.
"In terms of jobs, there's no net increase in GDP that comes from trading stuff that's already made. To trade things that are produced in other countries just to swap them,'' -- conveys a message, "that America can't produce anything and that's a very dismal view of the U.S. economy."
Lehman Brothers' Ethan Harris noted that while eBay no doubt transformed an "incredibly inefficient market for junk and turned it into a very efficient market for junk," at the end of the day:
"It's an example of good old-fashioned U.S. ingenuity, but selling used products is a limited business model."
That hasn't stopped John McCain and his senior adviser, rumored vice presidential possibility and former CEO Meg Whitman from making online auctions of Barbie dolls, Hummel figurines and car parts the centerpiece of their Disownership Society.
During his now-forgotten "Forgotten Places" tour two months ago, McCain told an audience in Inez, Kentucky, "You have a right to expect us to show as much concern for helping you create more and better choices to make for yourselves as we show any other community in America." And one of those better choices, according to John McCain, is to become a seller on the auction site, eBay:
"Today, for example, 1.3 million people in the world make a living off eBay, most of those are in the United State of America."
"We have about - around the world, about 1.3 million people make most, if not all, of their living selling on eBay."
For its part, the McCain campaign appears unconcerned about key sectors of the American economy hemorrhaging jobs. Back in January, John McCain told an audience in Michigan that he didn't want to raise "false hopes that somehow we can bring back lost jobs," adding that it" wasn't government's job to protect buggy factories and haberdashers when cars replaced carriages and men stopped wearing hats." Douglas Holtz-Eakin, his chief economic adviser, echoed that line:
"We shouldn't be obsessed with looking backwards all the time, and saying, 'Gee, where did those jobs go?'''
Nonplussed by those job losses, John McCain thinks even less about the economists who savaged his vision of American eBay economy. On June 12, the computer and economics non-savant rejected their objections:
"You know the economists? They're the same ones that didn't predict this housing crisis we're in. They're the same ones that didn't predict the dot-com meltdown. They're the same ones that didn't predict the inflation that's staring us in the face today."
As Fortune suggested yesterday, his eBay potion isn't the only reason economists will shake their heads in disbelief when McCain speaks on the economy. Asked "what do you see as the gravest long-term threat to the U.S. economy," Senator McCain replied:
"Well, I would think that the absolute gravest threat is the struggle that we're in against radical Islamic extremism, which can affect, if they prevail, our very existence."