Fear Factor
March 20th, 2008 by Peter SudermanWhile I might quibble with a few of his points, I think Larry Kudlow is generally right that fears of economic catastrophe right now are overblown. He’s especially right when he says that Democrats have “adopted pessimism as their national pastime, and want us to believe we’re already in a long and deep recession.”
Now, no matter what opinion polls say, it’s not entirely clear that we actually are in recession. It’s not something that’s decided by popular vote. There’s a technical definition — two consecutive quarters of negative growth — and right now, we have nothing definitively indicating that such a downturn has indeed occurred. That’s not to deny the possibility of a recession entirely. But the CBO, for example, in their most recent economic forecast, put it this way: “Although CBO’s projections do not show the slowdown in economic growth becoming severe enough to meet the economic definition of recession, the risk of a recession remains elevated.” So there’s cause for concern; but for the most part, the country need not have a heart attack.
Additionally, I think Kudlow’s idea about the Democrats having adopted an attitude of pessimism is exactly right. And it’s worth remembering that they do so in large part because their policies require it. They’re selling policies that rely on the notion that free markets, individual responsibility, and choice don’t work, so stoking economic fears isn’t just a matter of mood or opinion — it benefits them politically. The liberal agenda plays on economic fears, because, in large part, it’s those fears that that keep interest in anti-market policies afloat.
March 20th, 2008 at 1:16 pm
Well, many traditional indicators point to us being in a recession already, but we won’t know for certain until this summer…and the stupid stimulus checks may goose the GDP numbers enough to avoid a recession, technically at least. But its a great point– browbeating the economy is a kind of wag the dog scenario for the Dems this year.
March 21st, 2008 at 3:31 pm
Some are, but for the most part, the Democrats are middle-of-the-road types who’ve done more for free markets than people give them credit for. But they also push a notion of corporate responsibility as well, which is important and something you guys seem to leave off the table.
Keep in mind that historically when Republicans have gotten their way and have gotten the deregulation the so desire, it has almost always backfired and cost the taxpayers a lot of money. From energy, to accounting, to S&L’s, to the airlines, most of these plans have been abject failures. I think people are right to question whether or not the free-market idealogues really know what they’re talking about.
Like it or not, the economy is not doing so well, in part because of income inequality. I don’t know of any economist worth his salt that would argue that vast income inequality is a sign of a healthy economy. Real wages have continued to decline for the past ten years, the middle class is earning less than it was in real dollars, but executive compensation continues to rise. People notice this. So this isn’t a wag the dog moment. It’s been openly discussed for some time among progressives and democrats. concerns about the health of the economy for most Americans predates the current housing crisis by a number of years.
What you call “stoking economic fears” I call being honest. Everyone poo-pooed lefty economists who warned the Bear Stearns was in trouble months ago. A right-wing CNBC analyst even got on TV to assure us that “Bear Stearns is fine”, complete with charts and graphs “proving” his point, and that lefty nutjobs were trying to scare people into believing otherwise. Well what do you know…the leftys were right and the right-wing was wrong. Again, this makes we wonder why you think people should believe you about this. What’s worse, telling things like it is, or cheerleading a company teetering on the verge of bankruptcy because it would hurt you politically?
March 27th, 2008 at 7:56 pm
The send-up that “The Daily Show” did of Kramer on the Bear Stearns thing was a riot!