Sunday, February 15, 2009

How Bad Is It?

Every time I hear a media report about "record" this and "never-before-seen" that, I remember that I am historian and that, in fact, I have seen these sorts of things before, and in proportionally more significant amounts.

Look at unemployment. Yes, record numbers of Americans are losing their jobs. Could it also be that it is because there are record numbers of Americans period? Go figure: 100,000 Americans a week losing their jobs would be worse if there were only 150,000,000 Americans total, as opposed to the close-to-300,000,000 Americans we have around today.

Here is a handy chart that explains it well:


(source: Carpe Diem)

Proportionally, this ain't that bad yet. You still have to remember that while 7.6% of Americans who want to work cannot find work, 92.3% of Americans who want to work do so. And right now that's a lot of Americans. Scared Americans, to be sure, and likely to get more scared as the media continues to throw scary headlines at them...but nonetheless Americans.

Here be another handy chart:

Time-Curious-Capitalist-2-09-Six Recessions

(source: Time's Curious Capitalist blog)

And as someone who remembers the Seventies, let me also throw in a bit of anecdote. As the NYT and others were happy to trumpet the last few years (when it suited them), the economy can be in trouble without there being a recession "officially" in place. The Seventies were a case in point. We had higher-than-normal levels of unemployment while the economy was not officially receding. It was stagflation. It did not mean that the Phillips Curve had ceased to exist, but rather that it had shifted away from the axes. Keynes did not explicitly rule this relationship out: that's why he argued that in good times government must raise taxes and cut spending --which no one will ever do, not the Democrats, not the Republicans.

Even so, when I hear people yelling "crisis!" I tend to instinctively brace myself. Fear is a great motivational tool. It sure beats trying to tell Americans that the only thing they have to fear is... fear, itself.

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