Phil Gramm is sent into political exile, some say, for stumbling into the truth by saying we have a "mental recession" and America has become a nation of whiners:
Campaign Econ says the American economy is a certain way because Americans think it is. Campaign Econ competes with real economics and often wins -- with damage that extends way beyond, say, the political career of either Phil Gramm or John McCain.
[. . .]
That Campaign Econ is also calibrating Barack Obama's economic team goes without saying. The view among the nation's political advisers, from far left to far right, is that the economy is in a Katrina. Anyone who disagrees has no role in the 2008 presidential contest.
She's right about several things, I think. The economy hasn't been as bad as many have been saying, and by thinking it is, we probably bring on the worse economy sooner than it would have gotten here. But saying it's all the effect of Campaign Econ instead of "real" economics glosses over a little bit how much of a consumer economy we have. If the consumer is discouraged, the consumer will engage in less buying. The self-fulfilling prophecy is an inherent component of a consumber-based economy.
And there is more reason to be pessimistic this time around than in prevous "perceived downturns." We are feeling the economic pinch largely at the gas pump and the supermarket. Those are two places where we buy the same things in the same amounts over and over. It's hard to miss the steady increases. Usually I haven't noticed a change in my buying power when talk has turned to gloomy economics. This time I have.
Comments
I took a look at some of the news stories since the talk of the coming Great Depression -- a UK newspaper called the downturn in the US economy just that not too long ago. The news is frightening, if it is to be believed. But, a lot of it is just hype.
The economy is always rough before a major election. 1980, 1992, 2000 all featured stories about people losing their jobs and houses. We're in the cycle again.
I predict all will be well sometime in 2009 or 2010. All of the talk about the great economic meltdown will just be a fuzzy memory.
I'm a skeptic, Chris, and so I didn't believe your assertion. Just to prove you were making an unwarranted assertion, I went to the Bureau of Labor Statistics, and asked for unemployment compensation for the whole country, by year, for "all years". Here's the chart it gave me.
1984 282
1985 180
1986 208
1987 209
1988 241
1989 207
1990 218
1991 245
1992 341
1993 309
1994 316
1995 279
1996 213
1997 206
1998 193
1999 177
2000 192
2001 171
2002 233
2003 269
2004 237
2005 203
2006 207
Daggoned! It ALWAYS dropped the year following a presidential election, at least for the years BLS has available.
Thanks for teaching me something.
In previous years, it's usually been about people getting laid off. This time around, it's the double-whammy of the mortgage scam bubble bursting. That's not all Dubya's fault; Silverado was an early victim, back in the 1980s, and Oakwood Deposit Bank in the 1990s.
The fact that the dollar has been losing an incredible amount of value since 2001 we can lay at Dubya's feet; when you have bills, you ought to pay them.
The fact that we have international competition is no big deal. As "Dr. Phil" Gramm pointed out, we're more competitive than ever, although old technology companies are failing left and right, all around the world. Yes, companies outsource low-paid scutwork to the cheapest provider, but both studies and anecdotal evidence shows that doing so creates more high-paying jobs in the US.
And then there's the election-year crap.
We really could use a good conservative in the White House, someone who is honest and intelligent....