Friday, August 1, 2008

Not living up to his potential

[Of necessity, short posting today. I'm still reeling from Citizen Carrie being marked as a spam blog by the benevolent algorithms of Google. While she was down and back up all in the time I was logged off, it was still a shock. If she can be tagged as having "irrelevant, repetitive, or nonsensical text," what hope is there for the rest of us?]

I'm going to wander into the recession thicket once again. I do so with trepidation, as it is likely that the ORSA (Optimized Recession Search Agent) employed by sbvor will bring him back to my site to engage in endless parsing of the "official" definition of a recession. Actually, he seems to have moved on to a better class of blog, so I may be safe this time.

At any rate, Kevin Drum at Political Animal writes today about how we may actually be in a recession:
It may not be the worst or deepest recession we've ever seen, but I'll bet it's going to last longer than your average downturn.
Most of his post quotes Brad DeLong on how the employment numbers are even worse when we look at the U-6 measure of unemployment, the one that actually tries to take into account part-time and "marginally-attached" workers.

There has been a lot written and said as to whether we're actually in a recession. I don't believe that question is the most important; the NBER still doesn't seem sure whether we had one six years ago, so it's difficult to care. There are no relief measures that kick in when a recession is officially declared, so it doesn't really matter.

Perhaps we're asking ourselves the wrong question in the first place. Most of the recession speculation takes GDP (Gross Domestic Product) as the proxy for the health of the economy. There are massive problems with this metric, most significantly that a change in the underlying structure of the economy can change the assumptions that are used to evaluate it.

How many people remember Cesar Cedeno? He was a baseball player who came up with the Houston Astros in the early 1970s, and was thought to have remarkable potential (his manager, Leo Durocher, compared him with Willie Mays). And he had a fine career, as can be seen here. But it was never quite what is was supposed to be, his great seasons pretty much over by the time he was 25. He had injury problems, and an incident in which his girlfriend was killed seemed to take its toll.

The site at Baseball Reference to which I linked above shows a Bill James statistic, Similarity Score, which evaluates each player as to how similar their statistics were to other ballplayers. Looking at Cedeno by age, he starts out being similar to Vada Pinson, a great player who also peaked early. Cedeno from 27 to 29 is most similar to Hall of Famer Carl Yastrzemski; after that, it becomes Johnny Damon, and finishes with Amos Otis. Cedeno was no slouch, but he was no Willie Mays, and there are still many who see him as a big disappointment given his talent.

And maybe we need to start looking at the economy that way. Not, how is it doing?, but, How should it be doing? I'm the first person to say that we still have amazing strengths, a well-educated workforce with an entrepreneurial bent, piles of existing intellectual capital, a regulatory framework that offers some protection to creators and workers alike, and an openness to new ideas and structures that dwarf what the rest of the world has. (And, yes, I well recognize that many of those things have been compromised, I write about that all the time, but we haven't given up all the good stiff yet.)

So what do we do? We take a seriously flawed measure, take even a slight increase as evidence that we're not in an "officially-declared" recession, and feel better. But we should be looking at how this economy should be doing. Why are we comfortable with tiny increments to GDP, when we should be charging ahead like a team of horses? Instead of looking at crude aggregates, someone should develop an underperformance index, and we should be able to see just how our policies and practices are getting in the way of making the best life for everyone.


SBVOR said...


Mention my nom de plume and I just might appear (it ain’t magic, it’s Google).

Let that be a lesson to you.

It just so happens I updated my “recession that wasn’t” commentary this very afternoon.

You and your pals are still dreaming of a purely imaginary recession by way of concocting the usual conspiracy theories which always appear anytime the objective facts are inconsistent with your dogma.

Read the objective, substantiated, quantitative facts and weep for your much hoped for recession that AIN’T HAPPENING!

Anonymous said...

and i thought i was hard on you, andro. dang.

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