Tuesday, August 18, 2009

(PIP) Politically Inspired Pessimism

The most recent bug in my bonnet: Jack Healy a NY Times columnist is the most recent person to jump on the so-YOU-think-its-a-recovery bandwagon. His August 18th column is the object of my ire (link below). (Just to give you an idea where my head is at as I write this...how Freudian, I typoed 'columnist' as 'communist' the first time around. Reader beware!)

Recoveryists: Let's make it very clear what we pro-recoveryists think.
  • We think that the economy has stopped getting worse.
  • We do not think that every single thing in the economy has stopped deteriorating but that enough is improving to put the weight of the economy more on the side of growth.
  • We do not think that everything is 'just fine.'
  • We do expect improvement to continue.
  • Those thoughts do not make us a wild bunch. Some us think recovery will be strong and some do not. We all think recession is over. That's our commonality.

Forecast with a view? The contrary view, that this is NOT a recovery seems to have its strongest and deepest roots among Democrat faithful, although why that is I don't really know. A recovery is not anti-Democrat. But I can see that an economy in danger and in trouble could be an excuse to spend even more of the public's money on another fix-it scheme. So is that it? Is this view really just an agenda forecast?

Pessimism meets Catch-22 -- The trouble is that all too many taxpayers/voters are getting angry over the monies that have been spent already. And to the extent some argue it is not recovery yet and that recovery will be slow they seem to be saying that the monies spent (nearly two trillion on financial institutions and on stimulus) were not spent wisely. This road is a Catch-22 for Democrats. They should not go down it.

Obama bombs -- There is growing disenchantment with the funds spent on the stimulus program and anger among Americans who seek to answer to the questions, "Did this come out of my paycheck?" It's a question increasingly asked in the once famous and soon to be shunned 'town hall' meetings.

Town Hall Meetings: too dangerous to insure -- When people are angry with you and your policies you do not want to go face-to-face with them. That's what many politicians are finding out. Make them go to your local office one at time and wonder if you will be there, or make them go to Washington DC. Do not let them gang up on your in their home district. After all with unemployment so high the opportunity cost and the out of pockets costs of a local trip are very low for your constituents. Remember that those most motivated to attend probably are not your supporters. The idea that Republicans are invading these meetings is ridiculous. Just look at the facts...and at the polls.

The proof of the stimulus is in the recovery - People were happy enough to the get the downturn arrested when they were in recession, but now when the yawning chasm of depression no longer seems about to suck them in many are wondering exactly what was in that stimulus package? Many do not like what they are finding out. They are sure less than impressed when they look at the numbers for spending and see the continued pessimism in the outlook.

Straight ahead: But all this is really separate from the assessment on the economy. I hope I have dissuaded you from being the permanent pessimist on the economy to pursue some political agenda. The economy really needs to be seen in an objective light or policy will backfire.

Agenda-nomics: It is hard enough to make sense of what the economy is doing without being confused by having an agenda you want it to support. If you look back in this blog you will see that I was heavily critical of the stimulus program for having not enough stimulus and too much agenda. Those chickens are coming home to roost now.

Recovery is to recession as... Recovery is like a move from the intensive care ward in the hospital. The move implies that you no longer need such intensive care and involves the doctor's judgment about your prospects. . Doctors begin to look for your stabilization to become more positive and for you to head into recovery when they move you. They move you when they think the risk of backsliding has gone or diminished or if they have done 'all they can' for you. But just wheeling you out of intensive care does not make you any better. 'Cause and effect' do not work that way in the hospital or in the economy.
A forecast is not just an agenda-maker it is a tool - Those railing about the economy and saying that there are still a lot of problems are not wrong, they are just missing the point. The point is about where we are headed. The point is to recognize what economic data look like at the bottom of a recession and the point is to be decisive in your recognition of a new set of facts. The point is not to sit back and wait until every job-loser from the recession is re-employed before calling it a recovery. By then you may be on the brink of another recession. Whether or not that is true depends on how we conduct ourselves in this recovery. If we continue act like we are in a recession, making recession-like policy moves when we are in fact in recovery we will sow the seeds of a recovery that will not have staying power.

Bear in mind the consequences - So when you look at the economy and make your diagnosis, make it with a clear head to the consequences. The assessment 'recovery or not?' is about economics not about politics. I get the feeling that there is a NY Times bias out there, and maybe - just maybe - it's time to stop reading the business section of the Times for a while because their recent economic stories should really have appeared in the politics section, or in the Op-Ed.