Liberals, and Keynesian conservatives, are facing a tough intellectual challenge: Why do the American people — who, we can all agree, are otherwise perfectly delightful — persist in their stubborn belief that the U.S. economy stinks, when all experts agree that the fifth annual Summer of Recovery is upon us?
That question got a little more vexing this week, as the U-3 unemployment rate increased to 6.2 percent and a Gallup poll indicated Americans are the most pessimistic they’ve been about the economy since December (when the unforeseeable phenomenon of cold weather in winter — probably attributable to global warming — caused a surprise slowdown in the previously flourishing Obama economy).
The unemployment spike, as soi-disant experts love to point out, is actually a sign that things are improving, since it means more people are looking for work. (This time the experts may be right, as labor force participation has also increased.) But why can’t the people whose job it is to survive in the American economy, rather than pontificate about it, understand such subtle points? The answer rests partly in the failure of experts to miseducate the public, and partly in the failure of the public to understand the baroque terminology and chop logic of political economy. But mostly it rests in one hard fact: The experts are wrong, and the unwashed masses are right.
The president provides a wonderful demonstration of the principle that you can replace any number in any speech with “eleventy-four million” and the rhetorical effect will be the same. Obama brags that he (alone, presumably) created 200,000 jobs in July, and that certainly sounds impressive. But according to the Hamilton Center’s Jobs Gap calculator, the U.S. economy needs to be creating at least 280,000 jobs per month, every month, just to get back to the pre-recession employment level by the time Obama leaves office (presuming he is willing to vacate the White House at the end of his second term). For what it’s worth, the economy has averaged about 180,000 jobs per month since the beginning of the Obama presidency.
The collective buying and selling decisions of 330 million people constitute an irreducibly complex whole, far more complex than can be understood by any central planner or central banker. Since nobody can control economic outcomes on a large scale, but many people have an interest in making you think they can, there is a clear need for this kind of numerical obfuscation. The point of political speech isn’t to say things that concur with your lived experience; it’s to make you mistrust what you’ve learned from your experience.
Then at the end, Obama suggests the “steps that we could be taking to maintain momentum and perhaps even accelerate” are infrastructure spending, a higher minimum wage, more regulation of pay and leave, and more subsidies for student loans. The president would have us believe the economic boom is being held back by insufficient regulation and inadequate spending of taxpayer dollars.
It’s not a problem that few people believe this; it’s a sign of common sense. And it’s not a mystery that people whose understanding of the American economy is experiential rather than theoretical remain pessimistic despite what their betters say. The reason people believe the economy stinks isn’t that their understanding of monetary stimulus is inadequate or that the good news from Wall Street hasn’t filtered through to Main Street. They believe the economy stinks because the economy stinks. It has been stinking for nearly ten years, and that’s a pretty big chunk of your life to spend waiting for the good news to become believable.