Predicting the economy's rate of recovery

[nancylebov]

A while ago, , I asked about Republican predictions of Obama's effect on the economy. [1]

So, here's an overview of administration predictions of the recovery.

Found here-- The Great Stagnation is Cowan's theory that the economy is growing slowly in part because the easily developed good ideas have been used up for the past while.

Since I like simple psychological explanations, I suggest that part of the slow recovery is that the particular sort of collapse we had destroyed more trust and optimism than the average bubble. I think that bankers aren't simple profit-maximizing machines. They're human beings, and they were freaking out. They probably still are.

This is not a defense of fraud on a grand scale-- just a note that even thieves can panic.

[1] The reason I didn't check on my memory that Obama had been called a socialist was that I was posting in a low-energy moment, so I had just enough energy to imply that I was uncertain, but not enough to check.

Comments

[malkingrey.livejournal.com]

bankers aren't simple profit-maximizing machines. They're human beings, and they were freaking out.

This is possibly related to a theory I've held for some time now, which is that a lot of the bank-and-financial goings-on of the past decade or so are in fact the manifestation of a serious case of collective post-9-11 PTSD on the part of the financial sector.

How quickly we forget the baby boom.

[landley.livejournal.com]

The leading edge of the baby boom hit social security 2 years ago, and we're still in the ramp-up part of that. D-Day was June 6, 1944. The baby boom started in 1945 and continued for about 10 years. The oldest of the baby boomers hit age 62 (the social security early retirement age) in 2007, and hit 65 (retire with full benefits) in 2010.

This means they stopped working at their jobs, and started living on a fixed income. They stopped contributing to their retirement plans and started withdrawing from them.

From a 401k perspective, they hit age 59.5 in around 2004 (withdraw without penalties) and start needing to take mandatory distributions in 2016.

Baby boomers are A QUARTER OF THE POPULATION.

http://www.nytimes.com/2011/01/01/us/01boomers.html?pagewanted=all

This is an _issue_.

[whswhs.livejournal.com]

I'm not really sure why calling Obama a socialist is controversial. The social democratic political tradition is well known to be one of the three main branches of the socialist movement (the other two being Leninist and anarchist/countercultural); it gave rise to political parties all over Europe—for example, Labour in the UK ("Though cowards flinch and traitors sneer/We'll keep the red flag flying here" is pretty up front)—that have been fairly successful in implementing their agenda through electoral politics (the preferred method of social democrats); and Obama fairly clearly takes European political and social policy as a standard of comparison for the United States and a model that it ought to approximate more closely. I could see someone saying in response to calling Obama a socialist "You say this as if it were a bad thing," but saying it's not true is strange, and I'm not sure I understand it.

It would probably help if there were a clear definition of "socialist" on the field. I know what I mean by it, but I'm not always sure what other people mean by it.

[nancylebov.livejournal.com]

I don't think it's simply that-- everything I've read about the boom is that it was driven by euphoria, probably salted by a small proportion of people who knew what they were doing was fraudulent.

On the other hand, it's possible that the subsequent panic was made worse by the side effects of 9/11.

[nancylebov.livejournal.com]

I used to believe that calling Obama a socialist had an element of conservative bafflegab because they were conflating socialism with state communism.

More recently, I've met some far left people (including a Stalinist), and they're willing to use "socialist" as a term which includes them. To be fair, I can't remember whether the Stalinist considered herself a socialist.

So it's a mess. The only thing I can think of is to ask people what they mean if you have a chance to do so.

[whswhs.livejournal.com]

I've only had extended discussion with one person who embraces the label, and I have never yet been able to get him to define socialism as referring to any specific set of economic institutions. The one thing that he is sure of is that the Soviet Union was not by any means a socialist society. That sounds really strange to me, given the history, from the 1930s when leftists in most of the West held up the Soviet Union as factual evidence that a socialist society was both possible and desirable, to the 1970s when economists in the USSR started writing about what they had as "actually existing socialism" (a phrase I used to see in critical Marxist journals).

[andrewducker]

Well, they were the Union of Soviety Socialist Republics, so Socialism was part of the sales-pitch.

But as Wikipedia makes clear, there are numerous approaches under the socialism brand, and they can vary dramatically from each other. So long as you have some communal ownership going on, you've got some variety of socialism.

[anton-p-nym.livejournal.com]

Well, they were the Union of Soviety Socialist Republics, so Socialism was part of the sales-pitch.

Alas, nations aren't held to any form of "truth in labelling" laws. (*cough* Democratic People's Republic of Korea *cough*)

-- Steve does think that the USSR was a socialist state; it's just that the Soviet model, with its requiring a command economy, proved not to be a very good one to use.

[whswhs.livejournal.com]

As I think my mention of the two non-Leninist traditions should make clear, I'm aware of other interpretations of socialism than the Soviet Union's. There is, for example, the European model that Obama seems to favor, though of course an American politician can't call themself a "socialist," for reasons that have nothing to do with the serious analysis of comparative economic systems.

[dr-zrfq.livejournal.com]

One factor that seems to be overlooked a lot is the Fear Of Inflation -- or more specifically, the ongoing attempts to keep one's investments growing at a rate faster than that of inflation, after taxes. This used to be possible with plain savings accounts, but that idea died after 1973; since then, more and more investment seems directed at big short-term gains (at the expense of everything else) up to now where it sometimes looks like the only game in town.

[andrewducker]

Oh yes - in the US "Socialist" is a dog-whistle term. Here in the UK I hear people talking about how awesome our socialised medicine is on a semi-regular basis, although that seems to have happened as a backlash from the ludicrous fuss that the USA has made.

[whswhs.livejournal.com]

But the effect of that emotional reaction seems to me to be that Obama is not going to call himself a "socialist," even if in fact he is; it doesn't mean that calling Obama a socialist is inaccurate necessarily. Given the political aspects, what Obama calls himself is not evidential. As to whether he is, that depends on how you define "socialist"; his health care plan isn't much like the British (or Canadian) plan that you unhesitatingly call socialist, but it's a substantial move in that direction from where the United States was previously. And I think if Obama could have just gone straight to single payer he would have been delighted. But that's an interpretation on my part.

[andrewducker]

Yeah, I don't think that the USA is ready for a president who says "Yes, some of this is socialist, and that's a good thing.". Hopefully, some day they will be.

[whswhs.livejournal.com]

We will just have to disagree on that last; I think the United States has gone much too far toward socialism already. I would prefer to see the movement reversed.

The Sodyera Post

[sodyera.livejournal.com]

As a Socialist and a Clinton Democrat, I think Obama's just a Liberal Democrat who actually made it upstairs. So few of them have since Nixon.

Somebody somewhere gave me the figure that recessions happen every seven (7) years, and that they always take two or three years to recover from. I think what happened in 2008 was a small-d depression, and nobody wanted to use the D-word out loud for fear of starting a panic, just the way nobody in medicine wants to use the word, Epidemic.

Meanwhile, the Russian Band Pussy Riot has been sentenced to Soviet-style justice by Vladimir Putin for criticising him in a church. Blasphemy is a crime in Russia. France 24 is where I heard of this band's fate first. Then The BBC, then Deutche Welle. Only when the event appeared in American news stations was anyone reluctant to say the name of the band.

[bemused-leftist.livejournal.com]

This semi-Socialist thinks Obama is more of a Fascist in Socialist's clothing. Actions, not words, as Hillary said.

Re: How quickly we forget the baby boom.

[bemused-leftist.livejournal.com]

Boomers were a big generation who worked during a prosperous time, so they paid a lot into SS. SS is set up so that their payments went into a trust fund to invest at interest, till that generation comes to retirement age.

Now that it's time for them to collect, some politicians don't want that trust fund to call in its investments.

[paulshandy.livejournal.com]

I think the slow recovery has many reasons. Reinvestment of profits over seas, lack of investment in infrastructure and education, and the previous prosperity being an illusion created by maxing out our credit cards being my three favorites. The newest that I read about was how rich people who got tax breaks bought Treasury bonds with that money, T-bonds that the government sold to raise money to cover the tax cuts, and then the rich guys get paid back with interest with money that came from middle class tax payers, who then don't have money to buy goods and services.

[mindstalk.livejournal.com]

Where do concepts like "Keynesian liquidity trap", "zero lower bound of monetary policy", and "contractionary government spending" factor in?

[mindstalk.livejournal.com]

It's controversial because 'socialist' is commonly used and understood as an antonym to 'capitalist', and it's ludicrous to suggest Obama isn't friendly to capitalism. Social democracy, of course, allows one to be both "socialist" and "capitalist" in senses, but that's a subtlety lost on many.

It's also controversial because to many, social democracy is *not* socialism, it's either the sensible moderate spinoff or the traitorous reformist sellout of socialism. (I.e. socialism *is* an antonym to capitalism.) If one uses a narrower sense of socialism, whether of ubiquitous central planning or of ubiquitous democratic control of the the economy, then Obama's clearly not socialist.

I'll let you call Obama a socialist if you'll also call him a capitalist.