- #561
russ_watters
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I made no such statement. I said:Astronuc said:I disagree that the pessimists are necessarily democrats/liberals, because I know a lot of conservatives who are concerned about the economy. [emphasis added]
Changing my generalization into an absolute is an attempt at strawman.pessimists tend to be democrats/liberals while optomists tend to be republicans/conservative and we have a glut of the former here. [emphasis added]
My statement was accurate. It is true that the Democratic party's primary economic campaign tactic is selling pessimism to low-income people. Each candidate is, of course, different, and you happened to pick one one of the bigger offenders in Edwards (we've discussed his 'The rich get richer while the poor get poorer' lie here relatively recently - and in this thread, I think!). It is true that the Republican party pushes general optomism. That's what Reagan brought to the table: http://www.washingtonpost.com/wp-dyn/articles/A19168-2004Jun5.html
It basically boils down to:
Republicans: You can succeed on your own. That's optomism.
Democrats: You are incapable of succeeding on your own. You need the government to support you. That's pessimism.
When the predictions they are making are worse than what actually happens, that, by definition, makes the predictions overly pessimistic.The so-called pessimists are not pessimists, but rather realists.
I guess we'll see. Looking over his bio, his area of expertise is Japan and Europe (Germany is mentioned specifically). I presume, then, that he expects the type of problems that affected Japan to affect the US - an extended period of economic malaise. I don't see why that has to happen.Economist Puts Economic Downturn in Perspective
http://www.npr.org/templates/story/story.php?storyId=90343995
Listen to what Posen says about the next few years and future. Bascially, a majority of Americans need to learn to enjoy a lower standard of living. The reality is that a lot of things (including homes) were purchased on credit, and many do not have the ability to repay that debt.
Certainly credit spending was a problem. It contributed to the boost we got the past 10 years and is leading the current funk. But that's the credit market correcting itself. And the result is that that era of real estate growth is over for a long, long time. But despite that, economists are predicting a rapid, strong recovery from the current funk.
Regarding productivity, that could be a problem, but I hadn't heard before that we face a productivity problem. The data would suggest otherwise: http://www.bls.gov/lpc/home.htm
(btw, that link also shows hourly wages up substantially in Q1 08. I hadn't seen this form of data before). I do know our GDP growth has been consistently above our European peers, and I was under the impression that better productivity growth was part of the reason why. It's only an abstract, but:
http://ideas.repec.org/p/bde/wpaper/0625.htmlThere is a stark contrast between the recent evolution of labor productivity (and TFP) in the US and EU countries. In the US it accelerated around the mid-1990s and there is evidence of reversion to a high-growth regime. In some EU countries, while employment-population ratios started to rise after a period of stagnant employment, labor productivity (and TFP) decelerated. In this paper we apply univariate and multivariate methods, that have been used to detect structural breaks in productivity growth in the US economy, to EU data to confirm the existence of a significant permanent shift to lower productivity growth in some European countries around the mid-1990s. We find a structural break in mean labour productivity growth in the US around the mid-1990s (towards higher growth), in Continental Europe around the early 1990s (towards lower growth) and no evidence of structural breaks in the UK.
In any case, we do need to make sure in this discussion that we clearly separate the short term and mid-term predictions. At the moment, I'm focusing on the short term (the next year) and prospects for recovery. You're focusing on the next 5-10 (20?). I don't share your pessimism about our prospects in that timeframe, but the predictions are necessarily tougher to come by and I don't have a whole lot to say about it.
This again is short vs mid/long term. "Perfect storm" is fine terminoloty if we consider it a short term thing (as opposed to "global warming"...). I do see the current financial funk to be a short term thing, though "perfect storm" implies to me a level of severity that just isn't there.The financial markets (vis-a-vis Global Pool of Money) got reckless, and somewhere between $500 billion and 41 trillion just evaporated, because money was spent on assets that now are worth much less than money invested in them.
The US economy got caught in a perfect storm - overleveraged financial markets, declining asset value, increased cost (particularly for imported energy), and increased competition for resources.
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