Surveys make you wonder why anyone believes government is good for the economy
July 8th, 2008 by RossputinTwo Rasmussen Reports surveys released today cause me to wonder (as I often do) why so many people believe that government is the solution rather than the problem.
First, as TKeeley mentioned in an earlier posting on these pages, the Congressional Performance survey in which “Congressional approval fell to single digits for the first time ever.
“This month, just 9% say Congress is doing a good or excellent job. Most voters (52%) say Congress is doing a poor job, which ties the record high in that dubious category.”
Positive ratings for Congress were given by 13% of Democrats, 8% of Republicans, and just 3% of unaffiliated voters.
55% said it was unlikely that “Congress will address important problems facing our nation in the near future”, with 72% saying that “most members of Congress are more interested in furthering their own political careers” than in helping people.
While the only surprising thing to me is that we haven’t seen numbers like this earlier in our history, another survey (from July 4th) is more disturbing: Half of voters surveyed believe that America’s best days are behind us, with men more optimistic than women and Republicans more optimistic than Democrats. The only glimmer of light is that “82% say the U.S.A. is the best place in the world to live.”
The second Rasmussen survey released today shows that Americans’ pessimism isn’t limited to their perception of government:
At the same time, the Rasmussen Investors Investor Index fell to a new all-time low. Consumer confidence in the United States fell for the ninth consecutive month and set an all-time low for the fourth consecutive month. At 79.5, the Index is down four points over the last week, eight points over the past month, and thirty-three points since the beginning of 2008. The previous low—79.7—was established less than a month ago on June 12. Prior to this calendar year, the Investor Index had never fallen below 91.1 and it had not been below 100 since early in 2003.
And as if that weren’t bad enough, “For the first time ever, Rasmussen Employment Index data shows more workers report their firms are laying people off than hiring. As a result of these changes, the Rasmussen Employment Index fell six full points to another all-time low at 78.6. This is the third all-time low for the Employment Index in four months.”
Although things are clearly not great in our economy, they’re also not as bad as mainstream media would have us believe (maybe in their quest to prevent the election of John McCain). But when it comes to politics, perception is more important than reality and the party in power is blamed for circumstances which are generally (and should be) out of government’s control, such as a business cycle.
While it’s obvious to me that people should rely on government less, it’s possible to imagine a thought process from these surveys which lead to a different conclusion, and it goes something like this: If things get bad when government does a bad job, then wouldn’t things be great if government just did things better?
What people who think that way don’t understand is that from an economic point of view, “better” in most situations simply means doing less. So the better government does, the less need we have for it to intrude other than in areas such as regulating true monopolies and punishing fraud and other criminal activities. Surely, given poll results which show that Americans understand politicians’ true motivations, nobody expects government to will itself to a position of less influence. And that means government will never get “better” (namely smaller) without a fight.
It is certainly true that the government is best which governs least, but despite surveys like those released by Rasmussen today, enough Americans continue to live with a naive hope that “change” is all we need.
July 9th, 2008 at 9:37 am
Sickle,
Indeed greed played a big part in the credit issues we’re having now. I believe that fraud was much much less common on any large scale, such as in securitization.
However, where I think you get close to some real negligence was the behavior of the rating agencies in assigning high credit ratings to sub-prime and alt-A mortgages.
Here’s the thing, though: What do you do about such things in advance which wouldn’t throttle the dynamic creativity of our economic system, a system which the vast majority of the time produces the best outcomes and the highest living standards in the world?
Every once in a while…and in anything that involves humans…the market will get frothy, create a bubble, suck the public into overvalued assets. It’s happened forever, from the South Seas Company to the Tulip Mania to the internet/nasdaq bubble to, most recently, real estate.
People take their lumps, regroup, and move on. The current situation has certainly had wider and deeper effects, or at least faster effects, than some of those others, but not massively so.
All we can do and all we should do is let the market work and let people learn the lessons to be learned.
To be clear, we also should prevent and prosecute outright fraud. But I am saying that in an honest market, the best medicine for a problem is to let the market sort it out.
Where there is true fraud and crime, it should be punished harshly, but crime should not be confused with honest profit-seeking.
I agree with you that “corporate greed” is a hackneyed term. Furthermore, and again within the context of honest behavior, a corporation’s purpose is to make money!
Thanks for the comment.
Ross
July 9th, 2008 at 9:10 pm
“The only glimmer of light is that ‘82% say the U.S.A. is the best place in the world to live.’”
Of course, you don’t bother to mention that Americans are some of the worst world travelers in the entire world (with, until recently, only about 20% of Americans having a passport), so how *would* they know any better?
“which are generally (and should be) out of government’s control, such as a business cycle.”
Baloney. If govt. has so little to do with the way the economy works, then why do you guys always whine & complain about what the govt. is doing (or should be doing) about the economy??
“It is certainly true that the government is best which governs least”
Since when??
July 11th, 2008 at 1:13 pm
Sickle,
I agree that there should be more transparency regarding derivatives.
I believe that markets are generally honest, believe it or not. And I’m someone who has made a living in markets for 20 years. There are definitely bad actors out there…everything from insider traders to accounting fraud. I believe that sort of crime should be punished more severely than it usually is.
The problem is that by going too far trying to prevent certain types of trading, we’re likely to stifle the positive dynamic aspects of the market which have made modern economies so much more successful than economies in prior eras.
I’m not saying there aren’t cheaters in the market. But a free market is more important than finding every possible way to prevent cheating. It’s sort of like saying I’ll never leave my house because I don’t want to take any risk. You may be able to survive like that, but not very well.
Mr. Guy,
Thanks for your usual aggressive tone. Very nice indeed.
As for travel, this is sort of a fun story:
http://www.time.com/time/world/article/0,8599,1820358,00.html?
What do you mean by “you guys” when you say “you guys always whine and complain about what the gov’t is doing about the economy”?
I only complain when there are taxes and regulations which damage the economy. When the government is not interfering, I never complain that they’re not doing enough to help. It would take a truly huge threat to the system, such as what was going on with Bear, Stearns, for me to even consider any government role to be legitimate. And even that problem was in part caused by government changing accounting rules.
And as for “since when” is “the government best that governs least”, the answer is since the advent of government.
Have a lovely day.
July 12th, 2008 at 11:07 am
You hate America!
July 12th, 2008 at 6:28 pm
“You guys” = (in this case anyways) this website (FreedomWorks). By their line of baloney, the govt. is always either getting too involved in the economy or not enough in certain, specific ways. Sure, there is such a thing as the ‘business cycle”, but the idea that the govt. can’t influence it is just silly.
I view the Bear Sterns thing as a potential banking system/monetary market meltdown that was prevented by the Fed’s unusal move. Everything that I’ve read about it since (except here on this website of course) bears (sorry for the pun) that out. Well, “that problem” was also caused by the govt. and the former Fed chairman pushing ARMs very, very hard earlier in this decade…there is plenty of blame & responisiblity to go around on that issue, which these guys here at FW will never admit to.
“the answer is since the advent of government.”
Once again…baloney…you have ZERO facts to back this claim up, period.
Want less French abroad? Enact policies (like fiscial responsibility for one) that cause the Dollar’s value to rise.
July 15th, 2008 at 9:56 am
LACK of CONFIDENCE - based upon PAST Performance!