Sunday, September 14, 2008

Recession, schmecession - 1/19/08

[I hesitate to get into the whole recession thing again, because so many people are so touchy about the term. But the conclusion here seems to have been a valid one; the economic stimulus has worked no miracles.]

Justin Fox, writing The Rites of Recession in the current Time magazine, gets it just right, I think. The economy, which has been remarkably underreported during the presidential campaign, is a major concern of a lot of people. But the reporting, what there has been of it, has been devoted to the possibility of a recession: Are we in one? Will we be in one? How long will it last?

All of which misses the point. The problems that confront this nation right now transcend this discussion. Who cares if we're technically in a recession? As I've written before, much of the country is already in a recession. So our current challenges go beyond whether we're in something called a "recession" or just in a "slowdown." If you lose your home, or your job, you don't feel better if it turns out, years later, that you didn't lose them in a recession.

Even Fox spends 80+% of the article talking about recession - interesting stuff, but not vital. What is important "[are] long-term trends like the rise of China and India, the growth in income inequality, ... U.S. competitiveness, the state of the middle class." That he even mentions the possibility that "America's global role has been permanently downgraded" is journalistic progress that I am surprised to see.

Despite all that, the bandwagon-jumping legislators, who in a remarkable show of non-partisan support are backing the President, in what coincidentally is an election year, are getting behind a fiscal stimulus plan. Tax rebates (that even respected economists say should not be used to pay down debt, despite the fact that Americans desperately need to pay down debt) will be thrown around, but just try getting Americans to spend this windfall domestically. It won't happen, as we endorse our new checks directly over to China or Korea.

One of the downsides to globalization is that you can't control what happens within your own nation any more. The fiscal stimulus package may do very little to create growth in the U.S., but it may allow China and India to continue their surprising progress. Of course, our CEOs will still skim off some of that money as it crosses the border, so some of it will stay here.


Anonymous said...

china and india are enjoying WELL EARNED progress that isn't so surprising anymore. both nations have struggled for a generation to gain the global footing they deserve.

yeah i'm a skeptic about the "rebates". actually i remember the check called itself a "payment" which i guess isn't "compensation" (for doing nothing but collectively raiding our treasury together). the official word is that there was an increase in consumption, but some economists i read on the web (greg manikaw, brilliant but conservative) argued it would take check after check after check to keep it up because it doesn't bolster our own production and infrastructure. (he says that's what tax cuts are, so we should do those instead.) i think a two thousand dollar education tax credit would go further, but it would take too much time!

i heard a lot of people say it should be used to pay down debt, and i never heard an economist say it should not be. who said that? enlightened self-interest? i doubt it!

i maintain a large cash balance (remember me? can't even commit to a home or a family, you said? well my bank balance is $27k so $400 or whatever was just an annoying trip to the bank. definitely no cause for spending!)

you can call economic concerns "underreported" but that sexy gray haired journalist called them "far and away the most important issue on voters minds" last week. perhaps people already know the news? you appraise news sources in broad strokes that i frequently dispute based on daily readings of WSJ and NYT (occasionally both, usually just one or the other). not saying i'm captain awesome, but if you have economics on your mind, pick up these more detailed sources. EVERY ISSUE is the economy issue in the WSJ! i love that paper but news corp will kill it. i haven't read Time in years.

this made me laugh:

you know i credit the last recession with enlivening me in many ways. my frustration with the economy got me interested in economics journalism, an interest that deepend over many years of study. but this is your soapbox (not mine; i'm talking to you alone even as you ignore me; i have my own soapbox) so i'll stfu now.

Anonymous said...

put down the dreadful pap-news and get knee-deep in great sources like this:

output gap! who cares if it's in Time? what Joe Sixpack's seeing on t.v. news is a secondary story to the matters themselves.

Androcass said...

mcf, totally agree with your first point, and that is exactly the point I frequently try to make, that we have lost the will to do the same sorts of things, so caught up are we in laissez-faire.

Mankiw makes some good points, but may have hopelessly compromised himself during his Bush-shill years.

I read quite a few economists who felt that paying down debt would defeat the stated purpose of the "stimulus," which was to give a quick jump-start to the consumer-driven economy.

I don't believe I said that you couldn't commit to a home or a family, just that your commendable attitude of "take what comes" might conflict with those kinds of commitments. If I unartfully personalized it to the extent that you imply, I apologize; I meant a more general statement about people which I stand behind.

Real economic concerns have been underreported; try to find a decent news report on offshoring or resource mismatches, which are far more important to the future than a five-cent shift in the price of gas.

Sorry you feel that I have been ignoring you, but I made it clear (in a post you might have missed) that I would not be involved with the blog much, if at all, while I was away.

Anonymous said...

i can commit to a house and family, but no employer ever said i could count on it. i'm not sure there's any alternative to "take what comes".

you stated your precise objection to the globalization of the software industry in a comment a while back. but all i remember hearing is "we lost something". and yeah, compared to 1998, this is a more competitive market. you know what? i'm sad, too! yeah, i wanna earn huge wages! times change. that fact's worth about two minutes of my contemplation per year.

to you, there's something more to it. what more could there possibly be? what more of good sense could there possibly be?

you and carrie have taught me a lot about the fear pervading the citizenry, even while you deny that this is about fear. i've only sought to understand the fear, and to understand whether it's rational.

yeah, it's hard when markets shift against you. the alternative (no markets at all) is harder.

i'm paying attention, hoping to understand, and open to enlightenment.

idiocracy seems quite unlikely to me.

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