"
== Economic Recovery ==
This economic recovery has lasted longer, without even a small recession, than all but one stretch since WWII, prompting some economics sages like
John Mauldin to caution the next president - whoever - to expect a recession in his or her first term.
Hm. Maybe but can one say "this time is different"? Those are famously fatal words. But there truly are some differences. In fact we never had a recovery this
slow before, dragged by a Congress that refused to spend on badly needed infrastructure repairs, because that would create high-velocity money in worker pockets, and that in turn would have sped the recovery and helped democrats.
But this month's labor stats show it happened anyway. Steady, steady job growth and now those long delayed wage increases. Obstruction can only do so much. And hence the question: might there be a silver lining to this slowness? Could it mean that the usual recession just got
smeared into the more gradual slope of this slowly improving economy?
Certainly
psychological factors fit this model, with a US public deliberately talked into gloom, not just by Fox & pals but also sourpusses on the left. And hence no "ebullience penalty" this time. Except for an equities bubble, there's been no overshoot for a recession to correct. Just hardworking folks pushing it all forward.
Well well. Just a theory. No doubt there are forces trying to start that recession in time for the election... amid a myriad types of desperate cheating. Stay wary. Nurse a little optimism. Stay tuned.
== Psychological factors? Or reality? ==
In a different newsletter,
John Mauldinshows - yet again - what U.S. conservatism could be, if it decided to argue for market enterprise from a position of, well, sanity. The following figures that I clipped from that newsletter show what any sensible person has to understand... and the part of Bernie Sanders's riff that is blatantly and wholly and completely
right...
... that
wealth disparities in the United States have skyrocketed to a degree that no rationalization, no theory or incantation, can possibly justify anymore.
These charts - from a conservative capitalist economist - are clear, vivid and entirely self-explanatory. They prove that not only
America but flat-open-fair-competitive -creative
capitalism has been betrayed, and both desperately need a refresh, lest we spiral toward the other possibility. One that was well described by the famous historians Will and Ariel Durant, in
The Lessons of History.
"…the unstable equilibrium generates a critical situation,
which history has diversely met by legislation redistributing wealth
or by revolution distributing poverty.”
--excerpted from "The economic angle to electoral madness" by David Brin
"
Smith used the term “Invisible Hand” just once in The Wealth of Nations and only once in his earlier work, The Theory of Moral Sentiments. The historian Emma Rothschild, in her book on Smith and the Marquis de Condorcet, two towering Enlightenment scholars, argues that Smith was more ironic than serious about the Invisible Hand, always assuming an active role for government in creating the rules and regulations of society and fully conscious of the need for compassion and community, which he outlined rather beautifully in The Theory of Moral Sentiments.
But Smith took the Invisible Hand very seriously, I’d argue, even as he assumed a large role for government. He was a complex thinker, breaking new ground in many areas, and too much time has been spent trying to make his abundant ideas consistent with one another. He could believe in limiting government in some ways but expanding it in others. Even though he explicitly mentioned the Invisible Hand only once in The Wealth of Nations, elsewhere
in his masterpiece he addressed it at length.
Smith was formally a moral philosopher at the University of Edinburgh, and he had come to believe that individuals could often make their own decisions without help from a higher authority, a staple idea of the Enlightenment that was rapidly gaining cultural acceptance. A market undirected by government fit this philosophical disposition very well. Smith was determined to show that such self-oriented behavior on the part of individuals led to a common good. “Man has almost constant occasion for the help of his brethren,” he famously wrote, “and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love.” And then follows his most quoted line: “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.”
Emma Rothschild, appropriately skeptical of the Invisible Hand, emphasizes its “loveliness.” To many, she observes, it is “aesthetically delightful.” Rothschild notes that for the Nobel laureate Kenneth Arrow and his highly regarded coauthor Frank Hahn the Invisible Hand was “poetic.” Arrow and Hahn wrote that it is “surely the most important contribution of economic thought.” Another Nobel laureate, James Tobin, called it “one of the great ideas of history and one of the most influential.” The American conservative philosopher Robert Nozick is impressed by how it finds an “overall pattern or design” out of a seeming jumble of decisions."
--excerpted from "
"How Adam Smith’s Invisible Hand Was Corrupted by Laissez-Faire Economics" by Jeff Madrick
