Read Herman's bio and previous columns
January 21, 2008
Recession? Spare Us the
National Economic Pity Party
“The Economy” were a movie, the movie critics would conclude that “we
have seen this movie before”. With exaggerated fears of an immediate
recession being proclaimed by the media, the players are the same, the
movie plots are the same, the lines are the same, the chase scene near
the end will be the same, and unfortunately, the end of the movie will
be the same.
Here are just some of the promotional headlines appearing on media
marquees last week to entice you to pay the $7.50 to go to the movie or
order it on pay-per-view.
“DOW takes a 300-point dive”
“New housing starts down 25 percent for 2007”
“Inflation rate is worst in 17 years”
“Only 18,000 new jobs created in December 2007”
“Job picture gloomy, recession feared.”
And . . . “Media nearly unanimous: Recession inevitable.”
Federal Reserve Chairman Ben Bernanke said last week that we should
expect an economic slowdown in 2008. That means economic growth will
still be positive if the media does not scare the crap out the public
and business owners. He did not say to expect the great depression of
The Democratic leaders in Congress and their presidential contenders are
desperate to maintain the perception that the last four years of
economic growth did not happen. They continue to be in denial that we
have had over 50 straight months of positive GDP and job growth as a
result of the Bush tax cuts of 2001 and 2003.
Thus, the recurring lines in the movie by the Democrats of “the tax cuts
were for the rich”, or “this economy has not helped everybody.” And at
the first sight of an economic slowdown the Democrats and their media
allies proclaim “economic disaster!”
Admittedly, there are some components of the economy that are
experiencing negative growth versus a year ago, such as construction,
real estate and related businesses. And yes, there are some people who
are facing mortgage foreclosures due to poor lending practices by
lenders on the one hand, and poor spending practices by some consumers
on the other. But this is no time to panic, overreact or throw out the
baby with the bath water.
are in an economic correction, not an economic recession.
That means the free market dynamics of supply and demand will
unfortunately “downsize” the segments of the economy that are overbuilt
or have produced too much for the demand. And, that includes some
businesses that have expanded too much too quickly, and some consumers
who have spent too much.
this point in the movie, the media and some people are screaming for the
president and Congress to do something. (Music builds) So to
appear responsive to the “crisis”, they ride in on their famous white
stallions called “stimulus package”. That’s right, they all have
different stallions (ideas) named stimulus package. Here is where the
sub-plots and lines are truly old reruns.
The president was the first to put his ideas out in public, by proposing
to make the existing tax cuts permanent along with a short-term tax cut
in some form directly back to the working people. Even though the
details have not been released, presidential candidate Hillary Clinton
said the same day in a speech that “the president’s package does not go
But this is typical typecast Hillary. When the preliminary August 2007
jobs report was issued in early September indicating the economy lost
jobs, Hillary Clinton immediately proclaimed that President Bush’s
economic policies were a disaster. Two weeks later the Labor Department
revised the jobs report, as they do every month, and the final numbers
reflected another positive jobs report for August. I missed the scene
where she admitted that she had made a mistake.
the movie unfolds, look for Speaker of the House Nancy Pelosi to say a
variation of “Now is the time for the president to work with Congress in
a bipartisan way to help the American people.” Translation: Do it my
way. And look for Senate Majority Leader Harry Reid to say a variation
of “This president and his administration are a disaster.” Translation:
I haven’t a clue as to how to fix the problem.
Economic concerns have taken center stage in the arenas of media
coverage and the presidential campaign, but we do not have to be stupid
about what to do. We need to tighten our collective and individual
spending belts, and allow the free market dynamics to work the way they
are suppose to work.
also need certainty about the current tax rates, and that they will not
expire in 2010. This lingering uncertainty is at the heart of the
economic jitters. In the end, the less the president and Congress do to
“save the day”, the sooner the economy will level off. But as usual,
they will do something.
And as usual, the voters will not get their money’s worth – just a free
bag of popcorn, not realizing that it is already included in the price
of the ticket (taxes).
do not need to talk ourselves into a recession, and we do not need a
national economic pity party.
© 2008 North Star
Writers Group. May not be republished without permission.
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