Two articles appeared yesterday that could make you pretty depressed if you are at all inclined to depression. One at Bloomberg from Peter Orszag (OBAMA’s former Director of Budget and Management) and the other from Daniel Henninger at OpinionJournal. Said Orszag:
The continuing weakness in the labor market and the saga of the debt limit highlight the dual problems we face: low economic growth right now and an unsustainable amount of debt for the future. Unfortunately, both are probably more significant than policy discussions and official predictions about the U.S. economy suggest.
The history of economies recovering from severe financial distress implies the unemployment rate will remain stuck at elevated levels for years, not quarters. And sluggish growth, in turn, will mean larger budget deficits.
Robert Lucas, the 1995 Nobel laureate in economics, has spent his career thinking about why economies grow, and in particular about the effect of policy making on growth. From his office at the University of Chicago, Prof. Lucas has been wondering, like the rest of us, why, if the recession officially ended in the first half of 2009, there hasn’t been more growth in the U.S. economy. He’s also been wondering why this delayed recovery resembles the long non-recovery years of the 1930s. And he has been thinking about the U.S. and Europe.
In May, Bob Lucas pulled his thoughts together and delivered them as the Milliman Lecture at the University of Washington, an exercise he described to me this week as “intelligent speculation.”
Here is the lecture’s provocative final thought: “Is it possible that by imitating European policies on labor markets, welfare and taxes, the U.S. has chosen a new, lower GDP trend? If so, it may be that the weak recovery we have had so far is all the recovery we will get.”
The Obama-will-turn-us-into-Europe argument is a staple of the administration’s critics. Prof. Lucas’s intelligent speculation, however, carries the case beyond dinner-party carping.
See what I mean? Ugly stuff. I’m not an economist; I don’t have all those facts and figures to back me up, but I am a businessman and I make my living by visiting and helping businesses around the country. I visit 20-25 businesses, mostly manufacturers, every month. While that perspective gives me a less than glowing picture, it is not one nearly so pessimistic as these articles portend. I see businesses that have grown in the last 18-24 months and that project growth for the next 12 – good growth. I see businesses that need to expand and the balance sheet shows the money is there for the needed leases and real estate and equipment, but rather than build a new plant, they continue to try and squeeze more from the same. I see businesses that are working massive overtime to meet demand but absolutely refuse to hire.
Essentially, I see a crisis not of business and economics, but of confidence. People are simply afraid. The great economic engine of the United States of America is not out of fuel; people are simply refusing, because it looks so scary out there, to put it in gear. I can’t say I blame them. When you read economic news like these articles and the president behaves petulantly, even childishly, who can be confident? We’re out here working our little behinds off, and the president threatens the entire global financial system for the sake of his political legacy. The president is supposed to have our back, but nobody thinks he does.
And that more than anything defines what we need as a nation from our president, particularly in these times. We need someone that has our back, that gives us CONFIDENCE when we step out and risk it all to make a buck. Well, it is clear that is not Barack Obama. And so I survey the field of Republicans and wonder who can give the economy that confidence. Well, it is no shock to anybody that this blog leans heavily in the direction that Mitt Romney is that person. But I do not want to argue for Romney right now – I want to tell you what will not build confidence.
I mourn for every abortion that happens every day. I pray for the souls of all involved. Every time I am told I cannot pray “here” because well…, I fell that brief flash of anger. When I try to watch TV or go to the movies and am told I HAVE to think that homosexual practice is a perfectly normal human activity, I wince. But if all of those things disappeared tomorrow and nothing changed economically, I would have little confidence about tomorrow. If; however, the economy returned to its normal robust self – if we returned to essentially the economic America we have always been instead of the European social democracy we are threatening to become – then I would be confident not only in the future, but in my ability to carry on the good fight on those social issues that indeed plague us.
The last thing we need right now are pledges about marriage and abortion. We do not need purity tests; they are under these circumstances distractions. Worse yet they divide a party that desperately needs to be united to overcome the fiscal mess we find ourselves in. That is why the smart candidates are not signing those things. Seems like Michael Gerson, quoting Jeb Bush, agrees.
But we need more. The smartest candidate, the one that ultimately wins, has to do a bit more than prove he is better economically than Obama. (Heck – I probably qualify on that account.) The smartest candidate has to grab the nation by the scruff of the neck and tell us we are better than this. He, or she, is not going to win by pointing out how bad Obama is – that is as we used to say in physics class “intuitively obvious to the most casual observer.” The smartest candidate will be the one that tells us how good we are and makes us believe it.
So tune your ears dear readers. Rise above the fray of the ordinary that the media and this administration would pull us into. Focus on what matters, and remember just how good we really are. Don’t look for the candidate that will keep things from getting too bad – look for the candidate that inspire you to make things excellent. And tell your friends to listen that way as well.