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Bleakonomics 101 for 2012

03 Oct
Bleakonomics 101 for 2012

Spoiler alert: this evening, during the first presidential debate between Obama and Romney, we’re going to hear a lot about jobs and numbers.  It might look something like this:

1 part BS + 1 part PR = 2night

Unlike the rogues gallery of incompetent candidates out of which Mitt Romney ascended to receive the nomination to run on the Republican ticket for the presidency of the United States, the man is at least qualified.  He governed a very Democratic state and did something or other to save the Olympics in the chosen land of his religion’s people, Salt Lake City.  But those are incidental bona fides.  Ask most people why they’ll vote for Mitt, and the response most probable is some wishy-washy allusion to his background in business, Herr Exekutive of Bain Capital; that, in other words, he knows how to create jobs.  Leaving aside this particularly spurious ascription, let’s take a look at what — not even who — does and doesn’t improve the unemployment rate, shall we?

First stop: West Chester, Pennsylvania via Planet Money, to Mark Zandi of Moody’s Analytics to an uber-computer model lab that can run up to 1,700 variables of all the interconnected actors in the national economy, from the most mundane like paying the local mechanic to replace your car’s muffler to buy gas to drive to the big box store to pay on credit the TV that tomorrow a cable technician will wire so that come evening you buy that spectacular Japanese knife set and ShamWow! Deluxe on QVC, and all the myriad digressions of just that one series of transactions — the pack of Starburst your six-year-old cajoles out of you waiting in line at the big box store to the can of Red Bull the overworked cable guy buys at a vending machine before heading over to your house, to the pack of smokes the FedEx driver picks up at the gas station convenience store on the way over to your house where down the block the mechanic is looking at a Craig’s List ad to buy a couple guitar pedals thanks to that recent muffler job you paid him for, from that to the spectacularly more complex shit involving transnational speculation in the wake of quantitative easing to the short-term fallout of county pension plan portfolios after an oil spill or shutdown of petrol exploration in advance of a hurricane (a hurricane no doubt initially set off by the soft flutter of a butterfly’s wings half the world over…).  Any one of these strands teased out 1,700 different ways just to see how, in a hypothetical model, it would impact the economy.  Macro aggregate stuff.  Case-Shiller indexes based on cyclical factors and demographic trend influences, etc.  GDP, inflation rates, consumer spending, etc — or, the way gas prices shape consumer spending, which influences the hiring rates of companies, which affects inflation, which in turns affects consumer spending.  On and on.  Still with me?

There’s a billboard I see on the highway from Milwaukee to Madison each week that reads “How’s That ‘Hope’ and ‘Change’ Working For You?”  (In fine print, which is difficult to glean while driving in a 70-mph squinting blur, it says something to the effect of “paid for by a private citizen,” though you can almost hearing the ear-splitting twang of Sarah Palin saying “workin’ for ya?”)  To which I want to retort, “How’s the Repeal of Glass-Steagall Working for You and Your Loved Ones?”  Followed by the crystalline silence of those most affected by it who have no idea what I’m talking about (yet still vote Republican) that naught but the sound of my own breaking heart would shatter.  Nevertheless, the only real thing Mitt Romney can run on is the state of the economy, i.e., are we doing better today than four years ago.  It’s a mind-numbingly simplistic way of treating what is terrifically complicated as a yes or no answer.  But more than that, it wrongly implies that the state of the economy is something that a president can solely control, as though his hands alone are steering the wheel of that mighty enterprise.  To be sure, there are measures and implements a president can take (or recommend) to tweak this or that to the economy, but let’s not delude ourselves about the measure of influential control here.  Blaming a president for a bad economy is not so far afield from a child blaming her parents for crappy weather on her birthday.  It’s not for nothing that we use the same terminology for econometrics and meteorology — forecasts — because at the end of the day, it really is anybody’s guess.

But we’re an impatient people hopped up on instant gratification quick-fix pills shilled out every four years or so.  We are, after all, a people for whom shockingly impractical optimism is a core value of our conventional wisdom.  And so it is minutely understandable that faced with an ever rapidly changing world, abroad or at home (I never thought grandmothers and tattoos would go together, or protofeminist lesbians who dress like truck drivers in John Deere hats), where it seems we have less and less control over the forces that shape our lives, that we can at least determine the president who like some Wizard of Oz or God will make everything better.  Yes, it’s self-deceptive, as all politics is, but until we have a viable alternative, this is all we’ve got.

So, stay the course or try something new?  Look at his record, Romney will say disapprovingly.  How many remain out of work, how many have given up trying to find work?  Vote for me, I have a background in business; I know how to create jobs.  (But wait — I thought government doesn’t create jobs…  Isn’t that a Republican credo?)  And Obama will counter, yes indeed, let’s look at my record; if I hadn’t done this, that, and those other things, we’d be a whole lot worse than where we are [cue to center camera, change in tone of voice], which I know is not where we need to be; I know families are still hurting, struggling week to week, I know we can do better, and we will, but not if we give up now, if we replace building up the middle class with tax breaks for the wealthiest, which is how my opponent thinks we’ll fix the economy…

But just for the sake of keeping things simple and stupid, let’s render this election a “better or worse” litmus test of the last four years.  It is a cruel coincidence that Obama’s presidency perfectly coincided with the so-called Great Recession.  Before that, the unemployment rate was 5 percent.  Today it is at a nasty 8.1 percent.  Bad news for Obama.  Probably, but it’s really no more his own fault than it is within the sphere of influence for a Romney administration to fix.  Remember those supercomputers from earlier?  If nothing new happens in the next four years, the unemployment rate is predicted to drop to 6.6 percent.  That is presumably under a second Obama administration (though not necessarily).  So if we just stay the course, by 2016 the unemployment will drop 1.5 percent, which is nothing to sneeze at.  But it’s still only half of where we were in 2008.  Because these computer models can plug in all sorts of variables — and do so unquestioningly, without any explanation of how (or how improbable) — you can create virtual pie-in-the-sky scenarios, however implausible, in order to calculate effects.

So let’s say Congress gets past its despicable impasse and votes unanimously not only to fix the whole fiscal cliff thing, but decrease the national debt in half!  Tall order, but the supercomputer can handle it.  Clickety-clack of keystrokes, press enter, hour glass and drum roll, please…  We’re down to 6.1 percent, or only half a percent.  (Don’t ask me how such calculated machinations are quantified, please.)  No matter, there’s even better news on the horizon: peace in the Middle East!  Yup, all those nuclear weapons and whatnot dumped in the Red Sea, olive branches and accords of universal brotherhood from Tel Aviv to Tehran.  That shaves off only 1/10th of 1 percent.  As preoccupied — OK, obsessed — with gas prices as we are, the cost of oil is only a drop in the total economy bucket.  Fine, let’s try that other part of the globe under a lot of stress: Europe.  Let’s say the Eurozone becomes totally solvent overnight (I don’t know, Spain discovered a trove of unknown Picassos, Portugal harvested magic olives that cured breast cancer, Italy liquidated the Vatican and hawked the Pope’s ruby slippers for a couple million apiece, and a new earthquake in Greece uncovered an ancient culture of artifacts and architecture to make the Acropolis look like a pigpen.)  Bam!  All fixed.  Again, that would only help the American unemployment rate go down another tenth of one percent.  (A wealthier Europe means it can buy more American products, right?  But U.S. exports comprise only 12 percent of the national economy, and we sell to other parts of the world than just across the pond.)  Now we’re at 5.9 percent unemployment.  Even if you boosted housing values, even if you filtered the public drinking water with fabulous happy pills that increased consumer confidence like a Xanax holiday; if China no longer manipulated its currency and all of Africa became a kind of “new Brazil” on the international trade index, still — still! — the unemployment rate would be higher (5.2 percent) than where it was before the Great Recession in 2008.

This is the brave new world we’re going to have to face.  Change comes slowly, very slowly.  Plus there’s no going back; just forward.  We today can no more return to a golden age the likes of the middle class bonanza of the 1950s than the next generation will be able to return to the dot.com boom before the Great Recession.  Understandably, we may vote for a president in accord with the rattle of change (or lack thereof) in our pocketbooks — that all be distilled to “it’s the economy, stupid,” as Bill Clinton coined — but really the bread and butter of collective reality is based on variables far beyond our or any president’s purview; that, like complaining about the weather, we should be saying “it’s the stupid economy.”

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One response to “Bleakonomics 101 for 2012

  1. tom

    October 8, 2012 at 6:04 pm

    an excellent read. thanks man.

     

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