Whiners, All

Amity Shlaes mounts a stirring defense of Phil Gramm's "mental recession . . . nation of whiners" argument. I think it's telling that some strain of conservatism thinks that the debater's point that the economy's not technically in a recession until we see two consecutive quarters of GDP shrinkage should be at the center of how we understand this. The relevant point, it seems to me, is that the economic suffering is quite real, recession or otherwise.

[Among other things, if we experienced eighty straight years of 0.1 percent GDP growth, that would be an unprecedented recession-free span but also a large drop in per capita living standards]

Comments

Pity she wrote the piece before the new of IndyMac's failure came out. Would be nice to see how she spins that -- which may be just the first of several bank failures coming.

Posted by Bat of Moon | July 12, 2008 11:25 AM

The entire Council on Foreign Relations is filled with asshats. When they get something right maybe I'll give a shit what anybody associated with that shithole has to say. If establishment blindness is a Wonka Bar then CFR fellows are Oompa Loompas.

Posted by joejoejoe | July 12, 2008 11:27 AM

I really think that there's this deep-in-the-bone idea among conservatives that believes it's just not possible for the United States to ever have a "real" recession, just like it's just not possible for the United States to lose a war, do something immoral, lose its standing as the lone superpower, etc. Most of them won't come out and articulate it as such, but it seems to me a bedrock aspect of much conservative thought. And it seems tied up in the conservative conception of patriotism too, where the question isn't really "My country, win or lose"-- it's "My country cannot lose so by definition your saying so is merely an artifact of your hatred for America." I mean what possible conditions could cause Phil Gramm to think that America is in tough economic times? I don't think they exist. He simply equates America with prosperity the same way many conservatives equate it with righteousness and military invincibility and proceeds from those assumptions.

Posted by Freddie | July 12, 2008 11:29 AM

I think the Republicans should make "nation of whiners" its theme for the fall.

Posted by Joel | July 12, 2008 11:30 AM

To be fair to idiots like Phil Gramm, Amity Shlaes and Fred Barnes, this has been the attitude of our evil capitalist overlords for sometime. Witness the Wall Street Journal's infamous "Lucky Ducky" editorial from 2002, which complains that a person making $12,000/yr only pays 4% of that in taxes:

http://www.opinionjournal.com/extra/?id=110002937

Those lucky duckies should just suck it up and be glad that they don't suffer the 15% tax burden that those that collect millions of dollars of capital gains income have to pay!

Posted by calipygian | July 12, 2008 11:31 AM

I think Shlaes is right in that there's much worse to come.

Calling Americans whiners is therefore like saying "Why are you upset that I punched you? If you think that hurt, just wait until I hit you with this bat!"

Posted by Noah | July 12, 2008 11:32 AM

Then again, Amity Shlaes also wrote a remarkably wrong book about the Depression, so its very debateable that she knows what the hell she is talking about.

Posted by calipygian | July 12, 2008 11:36 AM

the debater's point that the economy's not technically in a recession until we see two consecutive quarters of GDP shrinkage ...

Shales is also, technically, you know, wrong. A recession is not two quarters of declining GDP, although you see supposedly wise talking heads repeating this endlessly. The National Bureau of Economic Research (NBER) calls recessions and this is their definition"

A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. A recession begins just after the economy reaches a peak of activity and ends as the economy reaches its trough. Between trough and peak, the economy is in an expansion. Expansion is the normal state of the economy; most recessions are brief and they have been rare in recent decades.

More here, including why they don't use the 2 qtrs of GDP decline as the definition of a recession.

http://www.nber.org/cycles/recessions.html

Posted by Jeff S. | July 12, 2008 11:46 AM

Ho-hum. Just to toss a boulder into the progressive reflecting pool here:

if we experienced eighty straight years of 0.1 percent GDP growth

Well, if you think maybe in terms of twenty to thirty years, then you'd be experiencing life amongst the growth flatliners in Old Europe, which modern leftists and progressives would have us emulate 1:1. What a wonderful idea.

And we won't have the benefit of an Iron Curtain falling at our border to offer us some occasional temporary relief: No, Cuba's not big enough to produce the same effect.

Posted by MarkG | July 12, 2008 11:47 AM

Just to be extremely pedantic, the official definition of a recession is not two consecutive quarters of negative GDP growth. It is widely accepted that NBER determines the timing of the US business cycle and according to them: "A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales."

In other words a recession happens when the NBER says so.

Posted by puzzled | July 12, 2008 11:47 AM

I think it's not so much a belief that recession is impossible, as much as it is a belief that the word has a MEANING.. And according to that MEANING, you can't say we're in a recession.

It's always a bad sign for the legitimacy of your position, when you find using words according to their accepted definitions too confining.

Posted by Brett Bellmore | July 12, 2008 11:51 AM

But that Shales is full of it is beside the point. I agree with Joel and Atrios. "A nation of whiners" is admirable Straight Talk(tm), and just what this country needs right now.

Posted by Jeff S. | July 12, 2008 11:52 AM

Best. Comment. Ever. from Brad DeLong's place:

Whenever I hear Republicans talk about tax cuts it reminds me of people in the movie Idiocracy talking about Brawndo and electrolytes.

Posted by calipygian | July 12, 2008 11:52 AM

Best. Comment. Ever. from Brad DeLong's place:

Whenever I hear Republicans talk about tax cuts it reminds me of people in the movie Idiocracy talking about Brawndo and electrolytes.

Posted by calipygian | July 12, 2008 11:55 AM

Freddie says: "I mean what possible conditions could cause Phil Gramm to think that America is in tough economic times? I don't think they exist."

Sure they do. If we were going through this same situation and a Democrat were in the White House Gollum Gramm and dozens of other GOP yappers would be crying like little girls on every media outlet in the country. Remember how they were screeching about disaster during the relatively mild downturn in 2000? Remember Dumbya Bush giving Al Gore a hard time about high gas prices during their first debate?

No rational person would prefer the economy of 2008 to that of 2000. In fact we were a stronger country in every way in 2000 than we are now - but Repiglicans were a bunch of whining pissy little naysayers back then.

How quickly they forget.

Posted by MoeLarryAndJesus | July 12, 2008 12:01 PM

so it's come to this: unless we're in a recession, apparently it's "whining" to think things are less than hunky-dory: all those people who have seen somewhere between little and no real income gains for years, those people who no longer have health care coverage at their job, those people whose house values are collapsing and who are facing foreclosure, the ones who don't see robust job creation, they have no idea what they are talking about because, see, "recession" has a meaning.

amazing, really.

although not as amazing as the breathtaking stupidity of markg, which has already set standards for this day that will be hard to beat.

Posted by howard | July 12, 2008 12:04 PM

Brett,

If the Democrats were resting their case entirely on slow GDP growth, to the exclusion of the economic fundamentals, I could see your point. But that's not the case.

Democrats are focusing on the fundamentals: high gas prices, exploding health care costs, expensive groceries, slow wage growth, disappearing jobs, etc. For the Republicans to counter that, yes, that's true, but it's not technically a recession and check out how competitive our multinational corporations have become . . . just seems addled.

Let's say you told someone that you were really worried about the Lakers because Kobe had broken his knee last week, Pau Gasol's addiction to black tar heroin had been uncovered by the L.A. Times a month ago, Lamar Odom wanted a trade, and Phil Jackson had been diagnosed with Alzheimers at the start of the season. Now imagine that someone told you in reply to stop whining because over the last three years, the Lakers' record had never dropped below .500, they'd reached the finals once, and therefore they were a "winning team." That's technically correct, but it's also plenty fucking stupid.

Posted by southpaw | July 12, 2008 12:14 PM

Sure they do. If we were going through this same situation and a Democrat were in the White House Gollum Gramm and dozens of other GOP yappers would be crying like little girls on every media outlet in the country. Remember how they were screeching about disaster during the relatively mild downturn in 2000? Remember Dumbya Bush giving Al Gore a hard time about high gas prices during their first debate?

No rational person would prefer the economy of 2008 to that of 2000. In fact we were a stronger country in every way in 2000 than we are now - but Repiglicans were a bunch of whining pissy little naysayers back then.

How quickly they forget.

Precisely.

And I'd like to remind viewers that Shlaes, like her security-state libertarian sidekick, 2X4 McArdle, has absolutely no formal training in economics. Not that this matters, of course, since both Phil and Wendy Gramm have PhDs in the subject.

Posted by SavageView | July 12, 2008 12:17 PM

For people like Phil Graham, a slowing of the economy might mean that their investments get a lower return and/or they aren't able to bill as many consulting hours as they were last year, and maybe they make a little less money. Frustrating, sure, but it doesn't impact their standard of living. That's why they consider complaining about it "whining."

For normal people with normal jobs, every last dollar is accounted for and budgeted. When your investments aren't going well and your income falls, it means that retirement gets put off, you can't save as much, and you have to cut deep into your standard of living to remain afloat. To tell these people that they're "whining" and that all of their problems are "mental" is insulting. But Phil, who's shtick has always been cultivating a persona as "insensitive asshole," can't even understand how anyone might be hurting under the circumstances.

Posted by Tyro | July 12, 2008 12:32 PM

SavageView, you might enjoy this jamie galbraith "review" of phil gramm's PhD thesis picked up yesterday at mark thoma's economist's view:

http://economistsview.typepad.com/economistsview/2008/07/what-kind-of-ec.html

Posted by howard | July 12, 2008 12:49 PM

according to that MEANING, you can't say we're in a recession.

That's weaselry, given that by the time you get two reported quarters of negative GDP, cyclical forces are likely trending towards expansion. That's why it's a stupid metric, per NBER: if you can't say 'it's a recession' until a point when it's likely no longer a recession, then you can't really say it at all. Which is the intention of a charlatan like Shlaes.

'We're in the shit' will do instead. And if movementarians want to keep with the Straight Talk™ of 'a nation of whiners' in 'mental recession', please let them do so at will.

Posted by pseudonymous in nc | July 12, 2008 1:40 PM

To back up Matt's parenthetical point, if I'm not mistaken a "per capita recession" began in Q4 '07 in the U.S., meaning GDP growing slower than the population.

Posted by DTM | July 12, 2008 2:21 PM

May be worth repeating a point from yesterday, that no single individual has had more of a hand in turning the commodities futures market into the permanent floating crap game it is today than Gramm's wife Wendy. She headed the CFTC early in Dubya's first term and, before leaving to join Enron, began the practice of issuing 'hedger' exemptions to swap dealers, which allows them to bring as much Wall Street cash into the commodities market as they please. You see the result every time you fill up -- $4 gas and $5 diesel.

It's very hard to see why the Democrats aren't beating the Republicans to death with this. Assets allocated to commodities index trading strategies have gone from $13 billion at the end of 2003 to $260 billion as of March 2008, and the prices of the 25 commodities that compose those indices have risen by an average of 183% in those five years.

Hell, we didn't even allow options trading on commodities in this country for the better part of 50 years, from the Commodity Exchange Act of 1936 all the way up to 1982. Now let's see, who was president in 1982? Hmmm. Same time the CFTC began approving cash-settled futures contracts. Kind of a pattern, you'd think, but don't tell the Democrats -- it's only the #1 issue on the minds of American voters.

Posted by John West | July 12, 2008 3:43 PM

Re: really think that there's this deep-in-the-bone idea among conservatives that believes it's just not possible for the United States to ever have a "real" recession

Well, maybe not when a Republican is in office. I suspect most of them would have an easy time crying "recession!" should a Democrat be in the White House.

Posted by JonF | July 12, 2008 3:52 PM

But what we'll never hear Obama say in any of his ads is the reason we're having a housing crisis and an energy crisis is largely due to not regulating corporate greed.

NO, not our AT&T or Verizon love-fest boy.

Posted by Me_again | July 12, 2008 5:17 PM

SavageView, you might enjoy this jamie galbraith "review" of phil gramm's PhD thesis picked up yesterday at mark thoma's economist's view:

LOL. For those of you not interested in clicking through, Phil Gramm did a lit review, which consistutes the first (and smallest) chapter of most modern dissertations in economics, if someone isn't simply stapling three papers together.

Posted by SavageView | July 12, 2008 5:54 PM

Southpaw, I live in Michigan, dead last economy in the nation. Nobody has to tell ME the economy is crappy: I'm laid off from my job of 23 years, and all the new jobs I'm looking at are down south. You want to say that the economy sucks, I'll agree. You want to say "recession", wait until the numbers prove it, or don't complain when Obama's President and the Republicans call every glitch in the economy a recession.

It's inconvenient that you can only apply the label retrospectively? Yeah, it's always inconvenient to wait for the evidence.

Posted by Brett Bellmore | July 12, 2008 7:23 PM

You want to say "recession", wait until the numbers prove it, or don't complain when Obama's President and the Republicans call every glitch in the economy a recession.

I'm pretty sure that all the political candidates, Obama included, have been fairly careful about this. To my knowledge, and I'm open to correction on this point, Obama has not come out and said "it's a recession." He has said things like this:

We are not standing on the brink of recession due to forces beyond our control. The fallout from the housing crisis that’s cost jobs and wiped out savings was not an inevitable part of the business cycle. It was a failure of leadership and imagination in Washington – the culmination of decades of decisions that were made or put off without regard to the realities of a global economy and the growing inequality it’s produced.

To my mind, that meets the test of accuracy far better than the Phil Gramm approach of painting a rosy picture on the way to telling people to quit their bitching.

To be clear, I think the position that the economy is sucky but not yet provably in recession is quite accurate. I just think presenting that point as somehow redemptive of Pepublican economic policy is politically unwise and sort of insulting to everyone's intelligence. After all, as you sasy, the economy does suck. We are on the brink of recession.

Anyway, aside from whether Obama has said that we're in recession, I'm not sure we have much to disagree about.

Posted by southpaw | July 12, 2008 8:00 PM

MarkG: Without looking it up, can you provide any actual numbers regarding recent real US or European GDP growth per capita? I can't either, so I'll look it up. Since you like shooting your mouth off, perhaps you could provide some numbers for the rest of us to check. Remember that growth provided by hordes of Mexicans streaming over the border to steal our jobs doesn't count, because they're just here to steal our jobs and mooch welfare (at the same time!) before returning their ill-gotten wealth to Mexico. Or do you not subscribe to that particular conservative belief? Also, while we're using GDP growth as the sole metric of national economic prowess, please explain to us how the U.S. should imitate the Chinese system so as to capture their recent 10-20% yearly growth rate.

To the point of the original post, I think Gramm raises a pretty good point that a lot of people miss in all the media panic. If you ask people for their outlook on the economy, you will get a barrage of negative responses due to the incessant media coverage of bad news. But if you ask people concrete questions like:

Have you lost your job?
Has your income declined meaningfully?
Have you lost health insurance?
Are you being foreclosed on?

You will get much lower (though still significant for those people) rates of negative responses. I don't know anyone who would say yes to any of these. I'm sure others here do, but we're not living in the next Great Depression (yet). Things may get worse. But the media does a lot of recession/depression worrying before any really significant consequences have hit the average person. I think Gramm was trying to get at that point and missed it by making his argument too strongly and not acknowledging some of the pain. But before you tell me that it's the end of the world out there, you need to find me large numbers of people who have been foreclosed on for reasons other than their own stupidity.

Posted by cgaros | July 13, 2008 1:28 AM