Aug 11, 2008

Economic Downturn

For some time now, the economy has been a major story in the news. Inevitably in these stories, the news presenter will interview an economist for his take on things. The economist will usually say something like this: "Well, gas prices and unemployment are up and a lot of houses are being foreclosed." Thank you expert, we didn't know. So what's causing this? "Well, oil prices continue to climb, the job market isn't as robust as we've seen in the past, and people are having a hard time paying their mortgages." Oh, thanks again expert, you are very helpful.

When asked what to do about it, our economist will mumble something about the Fed or Congress or banks or some such and then mention that the economy hasn't behaved quite like this before (even though the way they describe the situation it always sounds to me exactly like the stagflation of the 70s, but I probably just don't know enough about it). He never admits that he has no idea, but gets that message across fairly clearly.

I won't pretend to understand the complexities of economics (I did just fine in the one semester high school economics class that I took in 2004, but that's all I've got to work with here), but it seems to me that economists are the medieval doctors of our century. Their biggest help is to make us feel that something is being done about the problem. They may even know a few tricks that can help diagnose and treat a problem (based on knowledge of humors, prayers, leeches, herbs, astrology), which may or may not help somewhat, but the fact of the matter is our economists still don't have much that can help or explain what is going on.

Wait, let me amend that: Macroeconomics people are the medieval doctors. I can understand the way that microeconomics people help in a corporation or whatever. But people that try to explain the big picture generally don't know much more about what's happening than what the current symptoms are. Why things happen, where they are going, and what we can do to fix problems: all a mystery.

Now again, I may just be ignorant. Maybe these economists just know more than I do and our country would be a lot worst off if the Fed and other financial powers weren't working their magic. But honestly, can you think of a single time in history that a government's meddling in the economy actually fixed the market? I guess maybe in ancient times when people passed laws requiring the use of uniform currency or something like that, but can you think of a modern capitalist example? I can't. Even major economic projects like the New Deal really didn't do a ton (mostly just brought hope, which I suppose has its merits, but let's be honest, WWII ended the Depression and not the efforts of FDR and a progressive congress). Have/will things like the economic stimulus package or raising minimum wage help anything at all? I really don't see it.

The market fluctuates; it has its bad times and its good times and it's just as natural as the changing weather (which we also can't control...aside from reducing global warming, I suppose, but that's another huge topic that I could ramble about for some time). At least that's the way I see it. I really don't think there's a ton that we can do, except being smart about our individual finances.

Semi-related side thought: Remember how stagflation and all that made Jimmy Carter one of the least popular presidents at the time but nowadays he's a very well-respected man and even freaking won a Nobel Peace Prize in 2002? It's amazing how much the economy effects the way we look at our president, who really has very little to do with it. The question is: what if something similar to this happens to George W. Bush? How much of your disapproval of him has to do with the fact that we're paying too much at the pump or whatever your particular gripe with the current economy happens to be? History has a funny way of painting its figures in a different light then their contemporaries would expect.

Yeah, I don't see it happening either.


Erin said...

I totally, totally ate a hotdog from Macey's today. And although no one else will know why I am commenting on will. And that's enough for me.

emilee said...

...and you call yourself a liberal