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Jul 12, 2008

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David Wharton

Writing as someone you've scolded on this blog for once using word somewhat vaguely, I find it odd that you are arguing that we should abandon the well-established meaning of "recession."

You also say that the "technical" (= economically well-defined?) arguments about whether we're in a recession are "at best partial truths that obscure the larger picture," but you go on to dismiss arguments that put the economy in a long-term historical perspective. Seems to me that you want the "larger picture" to be just large enough to suit your political views, and no larger.

Will Shales's historical perspective persuade voters? You're probably right that they won't. Bill Clinton managed to persuade voters that we were in "the worst economy since the Great Depression" when we were actually in a recovery back in '92. (Remember "It's the economy, stupid"? But it wasn't the economy; it was the perception of the economy.) What worked for Bill will likely work for Obama, too.

Ed Cone

DW, the two-down-quarters definition of a recession is far from, well, definitive. It also leaves open the possibility that we're in a recession and won't have the data to show it for several months.

But I find the argument over whether we're in a recession or not to be the least interesting aspect of this discussion.

I see a lot of serious issues in the economy, with easy-to-understand numbers (e.g., ARM reset schedule, financial industry losses) indicating that we're not done yet. I see these issues having a serious impact on a lot of people, with knock-on effects (e.g., reduced consumer spending power) that could well widen the pain. I see the Treasury Secretary scrambling to avoid disaster.

And so when someone wants to veer off into a discussion of the R-word, or blanket condemnations of unnamed journalists, or use historical comparisons (however valid in context) to essentially change the subject, I just don't find it compelling.

David Wharton

To sum up your case, then: "what's compelling and interesting is that bad stuff that has and might happen, rather than the good stuff that is happening."

Understood.

Ed Cone

No, DW, that's not my case, as you surely know.

If you want to argue about whether or not we are in a recession, at this moment, according to one of the accepted definitions of recession, that's fine. It's not my focus, but have at it.

But if that becomes a way of avoiding discussion of (as Shlaes puts it) "problems in precise and even technical terms," that's another matter. And that's what I see Gramm, Shlaes, and Reynolds doing. I don't see them digging into the numbers and saying "here's why things aren't so bad," I see them nodding briefly toward the issues that are scaring the crap out of Bernanke and Paulson and Buffett et al, and then changing the subject to how bad things were in '32.

I agree that we need perspective. As noted above, I thing "nothing to fear but fear itself" is a good way to look at things; calling Americans "whiners," less so.

TM Lutas

You may want to see what Reynolds is actually doing (http://pajamasmedia.com/instapundit/archives2/017489.php) instead of just coming to preconceived conclusions. The problem with economic reporting is that it is both ideologically influenced and very often lazy/incompetent. Accuracy, fairness, and rigor isn't too much to ask is it? Apparently it is.

Dave Ribar

Ed:

One thing to keep in mind when discussing a major economy is how complex and multi-faceted it is. There is always some terrible stuff happening--businesses going bust, structural needs going unmet, prices moving too fast or too slow, etc. However, there are also some great things that happen at the same time. We like to organize things into a single neat narrative, but the economy doesn't work that may. It is never all bad or all good, even in a recession.

Ed Cone

Thanks for the lesson in bland generalization, DR.

There are always good and bad things happening: true.

But the end of a big-ass housing bubble, with enormous knock-on effects including severe stresses on the financial industry and a bear market in stocks, along with very high fuel prices and the return of inflation -- these are not just run-of-the-mill occurrences, and they are actually happening right now.

So, yeah, for the millionth time, let's maintain perspective, but let's not navel-gaze about perspective as a way of avoiding the economic issues of the day.

Dave Ribar

Ed:

Some "bland generalization" about the dynamics in the labor market is available from the BLS Business Employment Dynamics (BED) program :) The BED breaks labor movements into flows associated with business openings, closings, expansions, and contractions. The series shows how relatively modest changes in expansions and contractions contribute to changes in overall employment. Again, we like to think in terms of a single story, but there are many going on at the same time.

David Wharton

Ed, I also overlooked this: you wrote "at some point the extreme comparisons are just straw men" in a post featuring a painting of Marie Antoinette.

Inentional irony? But if so, why theme your post with just the kind of comparison you say you reject?

Ed Cone

I found a certain let-them-eat-cake flavor to the remarks by Shlaes and Gramm, and thus illustrated the point archly.

That seems to me a different thing than responding to attempts to discuss the ongoing financial crisis and related issues by changing the subject, but as you seem ill-prepared or unwilling to discuss the particulars of the current situation and all to eager to change the subject, your mileage may vary.

David Wharton

Changing the subject? You criticized Shlaes's piece about Phil Gramm, and I criticized your criticism, noted some contradictions, and related the situation to a previous electoral cycle.

Does "staying on topic" mean "agreeing with Ed"?

OK, I can do that, too. Bad things are happening in the financial & mortgage industry and in the stock market. They may very well get a lot worse. I have personally suffered a serious loss in my meager net worth. Friends have gone bankrupt. More people may lose their houses, jobs, and retirements.

That said, your instisting on a fuzzy definition of "recession" and your easy dismissal of historical perspectives on the current situation still strike me as tendentious, and my comments on them were entirely relevant to your post.

Spag

Bush signed an order today to lift the ban on offshore oil which could bring down the price of oil if the Congress lifted their own band.

Harry Reid and Pelosi basically said "let them eat cake" when they rejected the President's call to lift the ban.

David said "Does "staying on topic" mean "agreeing with Ed"?"

Yes it does. That has always been the case. Disagreeing with Ed or pointing out an inconsistency/contradiction in his analysis almost always brings out the "changing the subject" theme.

David also said Ed's case can be summed up as "what's compelling and interesting is that bad stuff that has and might happen, rather than the good stuff that is happening."

That is also exactly right, especially when it comes to Iraq. You will be amazed at how bright things get with a Democrat in the White House and how compelling and interesting "good stuff" will become.

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