Tag Archives: Economics

Self-Fulfilling Ivory Towers

We live in the age of irony and paradox, a time driven by the data-fueled world of computers to destinations shaped by fancy and rhetoric. Everything we value is something we must be able to see and quantify, even as we attack and devalue the skills of vision and quantification. In a recent exchange in an unnamed social network, the individual with whom I have debating summarily dismissed my points with what will be (sadly) the endearing slogan of our era…

“I don’t trust any argument based on numbers.”

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Debt Tragedy Explodes, Godzilla Feared Next!

In breaking news today, Mr. and Mrs. John Q. Everyman from Middle America entered a deep and uncharted wilderness today as their household debt has nearly doubled the size of their economy. Economists reported that they had long feared this shocking turn of events, as the lingering effects of Mr. Everyman’s decision to be laid off from his job in 2008 have persisted. The economic shock caused this year by the Everyman’s decision to have a child, despite their apparently self-inflicted poverty, has also proved insurmountable.

Fox News commentators have so far been unable to agree whether reaching this previously unheard of threshold will inevitably lead to bankruptcy for the couple, but they are unified in their assessment that the Everyman’s were reckless and fueled by a sense of entitlement when they chose to buy a home back in 2005. “Investment and property ownership are the province of the job-creators”, writes Bill Kristol, “working class salt of the Earth types like the Everymans should appreciate that their standard of living is higher than Equatorial Africa, and be grateful for the blessings of liberty.”

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The Union Buster’s Mythology

Much of the world we know is defined by its mythology, and politics is no different. Perhaps my favorite bit floating around the ether goes something like this; “The recession was caused by greedy Americans who make too much money and demand unsustainable benefits, while producing little of value. These people are not Wall Street brokers or big ticket bankers.” That’s right friends, the enemies of all that is good and wholesome, apple pie and baseball, are no longer poor people with no prospects and less work ethic. Step right up into the modern world, where working folks who have solid wages and benefits are the bad guys.

This brave new world we live has a really neat new math to power it as well. It would have to though, wouldn’t it? Basic arithmetic just doesn’t support the common contention, in both conservative thought and a brain dead national media, that purposely deflating wages would be the economic wonder drug that works wonders. The basic arguments that conservatives seem to be making on this subject are difficult enough to swallow, but the follow up arguments they are forced to make when their math breaks down are priceless. This isn’t high powered stuff here either, this is basic arithmetic…I promise.

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Searching For Someone To Blame

The modern practice of politics is, too often, the art of attaching blame. Whether or not a politician is popular depends, not on his or her policies or tactics, but on the way their tenure is framed by the political media. Barack Obama rode to the White House on a wave of positive feeling; his campaign was more positive than negative and the media embraced his personal story. Once in office, he experienced the other side of that media embrace; the side where the media grows tired of positivity and embraces the vitriol and controversy that sells ads.

There is no room for quitters or whiners in politics. It is for that reason that Sarah Palin should go away, and Robert Gibbs should stay away from lame criticisms of left-leaning media. The public is fickle; they may not understand all of the intricacies of policy, but they know weakness when they see it. You can blame media conspiracies for only so long before the public realizes that you are simply searching for an excuse. When it comes to scapegoating, the public is prepared to accept only that application of blame that is sanctified by the media, not directed at the media. Politicians that are successful over the long term happen on that success by virtue of their ability to get the media to sanctify their scapegoating.

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Foolish Hopes And The Housing Market

The story of the Great Recession is one of selective ignorance by those who know the most. The economists and financial reporters who spent years trumpeting the falsehoods about the investment value of single family homes and the utility of easy credit are still given credence. Amazingly, those professionals who missed the $8 trillion asset bubble still have their posts at think tanks, newspapers, and cable television. More amazingly, they are the people that politicians are turning to for advice on how to “get out of the slump”.

I suppose there is some logic behind asking the arsonist who burned your home down for help in rebuilding it, but I’m not buying it. Reporters for the New York Times, NPR, Wall Street Journal, and others still talk about the declining home prices as if they are stocks: they imagine some magical formula will cause a rebound to pre-crash levels and all will be wonderful in the land again. The simple truth of housing prices is that they aren’t falling away from normal levels, they are falling towards normal levels. According to Dean Baker, the celebrated economist on record as early as 2002 about the bubble and its dangers, housing prices are still 15-20% above normal trend levels.

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Populist Economics

I have a quick note today on populism and economics in the aftermath of the Senate’s passage of financial reform. The reform law, as an aside, is stronger than I thought it would be, but still weaker than the structures in place through the mid-1990′s. The reason we the people did not get real reform of the financial marketplace is because of our general confusion. See if you can follow this logic:

  1. The government deregulates much of Wall Street, and fails to enforce the regulations left
  2. As a consequence, Wall Street takes actions that threaten survival of nation
  3. President Bush pushes for and gets Congressional actions necessary to save the nation
  4. President Obama distributes the second half of the bailout under stricter conditions for payback than originally passed
  5. People take to the street to protest the “Obama Bailouts” and “Socialism”
  6. People take to the streets to protest government involvement in the markets designed to prevent all of the above from happening again (i.e. stricter regulations)

We the people need to have a discussion about what financial steps are in our best interests, and which ones serve only to enrich a select few. While some steps serve both Wall Street and Main Street, most do not.

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