The “Point One” Percent

Posted on May 1, 2014 by

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We are all collectively the “point one percent” now.  That is, we live in an economy that measured ,1% (you read that right) growth in GDP in the first quarter of 2014.  Are we in for a “double dip” recession–have we really emerged from the previous one, despite fine economic definitions (and let’s be clear, the definition of a recession is an analytic a priori one–sorry, but sometimes philosophy gets in the way.  Such a definition is true by virtue of its terms, not because of experience).  At any rate, things aren’t going all that well for our economy.  And we can’t even be sure that figure is correct.  It might be worse, and some economists believe it is.  What ever the actual nature of the fact, it is a fact.  What do we make of it?  Maybe not too much yet, unless it continues.  But it does give pause.  You can spin it as caused by the unusually cold weather, but that was already accounted for in the predictions.  You could say it is a fluke.  I don’t think I have heard the White House use that one (yet).  My opinion, for what it is worth, and since it is free, you can judge for yourself, is that we ought to take it seriously, even if we don’t panic.

What it says for now is that our huge economy, which we had expected to be producing goods, jobs and income by now, has come to almost a dead stop.  This after six years of promises that all we needed was enough stimulus, plus new taxes (thankfully that one largely, though not totally, failed, plus nearly zero interest rates, and we would be humming along.  I am not all that well-schooled in macroeconomics (perhaps a bias in graduate school), but even I can see that those policies were not going to work, except for those favored by the political choices made by the stimulators to help their cronies.  We’ve all been Keynesians and now we are all in this really tiny boat together.  I can’t tell whether it is sinking yet, but you might want to ask the unemployed and underemployed how it is working.  The percentage of our population actually working has dropped to 45.4%, the lowest since 1983.  Not all of that is due to the president’s policies and lack of policies, but a good deal certainly is.  Real income for the “middle class” is stagnant.  Prices are rising for food and gasoline–the two items left out of inflation figures, not always wisely, but politically helpful.  More people are on some type of welfare than ever, and guess who has to pay for that.  Finally, regulation is costing our economy an estimated amount per year equal to about the tenth largest economy in the world.  

I may sound like a doomsayer, but I am actually a realist.  This is what we face.  It sometimes might not look all that bad.  I get up in the morning and have a job I love to go to.  The trees are (finally) blooming here in Ohio.  It was actually 75 degrees two days ago, with sunshine to boot.  My wife and dog and children greeted me, in that order, but relatively happily.  My car worked and I made it to work, as always by the grace of God.  And it didn’t look all that gloomy for others as well.  But for many, it is a darker picture.  And what about all those individual entrepreneurs who possess the creativity and drive and intelligence to strike out boldly to create new businesses that benefit all of us?  They might well be stymied.  And we won’t get to enjoy what they might have provided us, at least not now.  We won’t get to enjoy the competition they might have brought to their particular markets, resulting in both better products and lower prices–plus prosperity for them.  And we won’t and don’t see very much the earned success that Arthur Brooks so eloquently speaks about for those following their God-ordained vocation.

So where is the hope?  For those who love Christ, there is always hope, that we need not fear what cannot destroy us, but only reverence the One who has the power over life and death.  But for now, is there temporal hope for our economy and economic well-being, not that this is the summum bonum?  We must win the war of ideas.  Some groups and individuals are currently doing yeoman’s work in that task.  I think of American Enterprise Institute, the Acton Institute, the Heritage Foundation, and the Institute for Faith, Work and Economics, to name a few.  Not only do they make the case that current economic policies create intended and unintended harmful consequences for real people, but they are busy about proposing new and inspiring ideas (not so new really) about how markets can work to produce human flourishing.  And of course, my hope is that our own modest little blog will also contribute to the marketplace of ideas.  I urge all of you who are economically literate to also articulate the best of economic ideas.

 

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