It’s always been distressing, but never more than now. No matter what side of the great political divide you are on, blood red or midnight blue, there’s reason for irritation, even fear and loathing, as you hear the news out of Washington.
Will Republicans really risk a deeper economic cataclysm because they won’t accept a dime of new taxes for the rich? Will Democrats resist steep cuts to Medicare and Social Security to the bitter end, calling the Republicans’ bluff? Just who’s bluffing, anyhow?
On top of that, there’s equally distressing international news. Will Greece go into default? Will Spain and Italy follow?
Will markets crash everywhere? Never mind recovery, which every year seems like it’s another year into the future, can the economy sink even further? And is it just our imagination that the weather is weird more often than not?
If you are a Democrat, you wonder: Is it really even remotely possible that we might be witnessing the election of President Michelle Bachman next year? How can this be? If you’re a Republican, you probably can’t imagine that President Obama could be reelected in the midst of this Great Recession.
In the midst of all this dysfunction, or maybe the cause of it, the economy remains slow, slow, slow, and that’s our daily reality. I bet you aren’t spending a nickel more than you have to. I know I’m trying not to. In economics, that’s called weak demand, which causes businesses to contract, which keeps unemployment high, further reducing demand.
An economic death spiral.
In classical economics, Keynesian economics, which has never been disproven even though it is often ignored, the only solution to weak demand is government spending. But today’s politics – nationally and globally – don’t permit more government spending, because all of the political passion is on the side of working to reduce deficits. Since no family or business can run deficits, it’s easy to convince people that government deficits are also wrong – it seems obvious – but the fact that they are necessary during an economic downturn is precisely what Keynes discerned.
I read somewhere that what governments are doing now is comparable to what doctors used to do in bleeding sick people to try to cure them. That treatment was based on faulty science. Now our governments are bleeding us by reducing spending, and somehow this is supposed to get us well. That’s equally faulty economics.
And yet, we keep hearing that he federal debt really the very source of the problem.
Have you got a headache?
Locally and individually we are gallant. I see this gallantry all over the place as people go to work every day and do whatever they can to stimulate some business. People work harder for less. Businesses offer lower prices or more service or value for the same price. We all struggle to pay off debt, or at the very least to resist the impulse to charge anything to a credit card. It’s better to do without. Yeah, more weak demand.
I’m a newspaper guy, so maybe it’s my fault for reading too much, but I also read somewhere that the Great Recession represents the harshest economy in most people’s lifetime, and even in their lifetime plus their parents’ lifetime, and for a lot of people under the age of 50, even their grandparents never experienced an economy this harsh.
We hear that this isn’t a “business cycle” downturn. It’s something more fundamental, something structural. Some people theorize that we are reaching the limits of the planet’s capacity to support us all, and this is ultimately forcing what is essentially a massive cut in our standard of living.
What a paradox! If the problem really is a matter of too many people consuming too much – too much energy, too much meat, too much travel – then how can we restore the economy by reviving demand? But if the economy remains so weak, how can we invest in the innovations that would mitigate the impacts of all our consumption?
The forecast is for a busier-than-average hurricane season. But, then, maybe a big storm is just what’s needed to address the record drought in Texas and the South.
Do we have a basis for optimism when we look forward?
There is, if nothing else, human doggedness and ingenuity. Soldiering on.
That’s what I see looking around. My friends and neighbors, and customers and readers, all of us, soldiering on in the face of great uncertainty.