Demanding Intelligent Discourse on the Economy
Thomas LyonsFor those of you who are new to the 2008 US Presidential campaign, here is a quick layman’s overview.
*Barack Obama is black. His time is now. Change. He was against Iraq from the beginning. Has a racist pastor.
*Hillary Clinton is experienced. She’s a woman. Snipers shot at her, or something. Superdelegates.
*John McCain is a POW-camp survivor. He likes the war a lot.
*Oh, and one more thing…no one has any idea what to do about the economy.
TIME Magazine has an excellent article from two weeks ago about the peculiar absence of intelligent economic discussion in this year’s campaign. Two of the most major news stories of 2008 – the Federal Reserve induced buyout of investment bank Bear Stearns, and the ongoing housing crisis – are economically based, yet the media, it seems, would sooner give the public an updated breakdown of superdelegate counts and prospective running mates.
Quoting TIME…
“It becomes clearer by the day that this is not your grandmother’s–or even Barack Obama’s grandmother’s–economic downturn. This time we start with a huge government deficit and record private debt, all run up when times were good and we should have been storing up acorns. This is one that begins with people losing their homes, which is usually the last act of the drama. This is one that is bringing back stagflation–that poisonous combination of economic slowdown and eroding currency we cured at a terrible cost back in 1981. When that red phone rings in the middle of the night, it probably won’t be the National Security Adviser saying Osama bin Laden has struck again. It will be the Treasury Secretary reporting that markets have opened in the Far East and the dollar has become worthless.”
If the Federal Reserve has any responsibility at all, it is to protect the integrity of the currency it is charged to administer. Instead of biting the bullet of temporary, periodic recessions, the Federal Reserve has instead caved to political pressure, and funded away these momentary hiccups with the issuing of new dollars. Things of all sorts – books, groceries, houses, cars, and yes even currencies – are priced in accordance with their relative scarcity and their perceived value. The US dollar is at an historical low because dollars are neither scare nor is the US Federal Reserve perceived well.
Do not, as many will, assume that the possibility of a worthless dollar is naïve. Nay, it’s far more naïve to assume it could not happen. Americans consume a larger portion of their income than any other nation – an income, by the way, which is already larger per capita than many other developed nations. Combine gross over-consumption, with gross overproduction (that is, the printing of new money), with gross over borrowing by the government and individuals; we’ve sent a loud and clear message to foreign currency investors: “We think dollars grow on trees.” Say that message for long enough, and they’ll believe it too; the market value of our currency is not entirely in our hands.
The very existence of any advanced non-local economy depends on the ability to go beyond bartering and utilize currency. Of course, this depends on there being a universal recognition of the value of said underlying currency. Without this universal recognition, we’re left with the choice of bartering for goods without using the currency, or the hyperinflation of goods priced in the currency. Could you manage if your household’s budget quadrupled? Do you think other Americans could? And what if the economy one takes for granted could no longer depend on any thing produced outside of a 20 mile radius? Do you trust local authorities to maintain the peace in such a situation?
These questions may have perfectly reasonable answers; indeed I hope I am proven to be off my rocker. To ask them, though, and to expect intelligent answers from our leaders is entirely fair for the economically conscious voter. It is, indeed, an issue of far greater weight than artificial sniper fire, candidates’ POW camp history, or Rev. Wright.
April 10th, 2008 at 8:58 pm
Excellent commentary. I’d go a step further–the thing Obama, Clinton, and McCain seem to have in common is not just indifference to the imminent possible economic crises; it’s an entrenched belief that the economy is infinitely resilient, and can be bled and abused at will without consequence.
April 11th, 2008 at 12:42 pm
I think we have to give credit (or blame, in this case) where it’s due. Clinton, McCain, and Obama all subscribe to the Natalie Merchant school of politics: “Hey, hey, give ‘em what they want.” (That’s from the 10,000 Maniacs song, “Candy Everybody Wants”, by the way.) The reason why Bernake et al. at the Fed and the three major presidential candidates refuse to treat the economy seriously is fundamentally because most of us don’t want them to treat the economy seriously.
George W. Bush, for example, ran on the platform that we could cut taxes, increase spending, and grow the economy. Anyone who’s ever tried to balance a personal budget for a week knew that that pledge was complete nonsense, but most voters prefer to pretend that they can have their cake and eat it to, and then sell it for a profit. We’ve become a something-for-nothing society to an alarming degree: demanding high-paying jobs out of college, taking out huge debts and whining when we have to pay them back, buying houses well beyond our means and expecting the government to bail us out for our poor choice of investments once we can’t pay our mortgages.
The day of reckoning for our economy is not far off. And it will be extremely painful. Time was when it would have been only extremely inconvenient, but we refused to take our medicine then. Now we have bigger problems to deal with. We’ve put them off (and insisted that our policymakers put them off) for several years. We may have another year or two to put them off some more. After that, though, we’ll be stuck with the check — and completely enraged and incredulous that we should ever have to pay it.
The Three Amigos are just showing that they’re excellent politicians, and aren’t telling us what we don’t want to hear. If we want to look at a major culprit behind the lack of a serious discussion about the economy, we need only look in the mirror.
July 11th, 2008 at 4:24 pm
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