Not to go all Star Wars on you,1 but the combination of the GDP revision downward for Q1 and the debt-ceiling mess is putting a real damper on my Friday. Our economy is stagnant, politicians are engaging in the contraction-is-expansion fantasy, and the consequences for the next decade are unpleasant. For the next year, for hundreds of thousands, it’ll be dire.
Unlike Paul Krugman, however, I can’t express too much outrage since we are far from unique.2 Europe is engaged in its own craziness, and if there’s one thing an historian should not be surprised at, it’s mass irrationality or hysteria in times of disruption. Macroeconomics is sometimes counterintuitive, neo-Keynesian models moreso, and the punditocracy is often infected with the latest fantasies of Very Serious People, such as the confusion of centrism with moderation.3
I suppose the rational response is to fight for better policy and also plan for disaster–in this case, a mild recession in the next year and long-term stagnation. That’s pretty far from George Lucasian heroics, but that’s where I am at the moment.4
Update (7/30): Suzy Khimm has more at Ezra Klein’s blog.
Second update (8/2): Paul Krugman has declared an “inverse miracle of intellectual failure.” Can’t say I disagree, but that’s maybe just to show that just because you’re in a position of power or punditry that you have any more knowledge than the rest of us.
- Krugman’s comment on the GDP revision is correct as far as I can judge, and since he has far more readers, his outrage has a much greater chance of budging things than mine would. [↩]
- E.J. Dionne deserves a Pulitzer Prize for Wednesday’s column on that point, but the same people who award Pulitzer Prizes are infected by that fantasy, so he won’t get it. [↩]
- Yes, I am enjoying the new WP-Footnote plugin I just installed on my blog, thanks to Dan Cohen’s suggestions on WordPress. So I can take some small pleasures as well. [↩]