April 06, 2008
ECONOMICS: Reader John Lewis emails a number of center-right blogs:
I'm a long time reader and fan of your blogs and a staunch Republican, but am increasingly worried that the approach to ignore or minimize economic bad news is not going to work in this election cycle. It seems to me that none of you are particularly interested in economics, however, I'm afraid that we are all going to be interested by the time this business cycle is over. There is a very good chance that the unemployment rate will be significantly higher this November than November of 1996.
This may well be true; we're overdue for a recession -- we haven't had a really deep one in over 25 years -- and my sense is that there remains a lot of economic idiocy still to be wrung out of the system, which is what recessions are for.
Speaking for myself, though, I'm not an econo-blogger. I tend to be over-pessimistic, but I guess I have tuned out a lot of the media econo-doomsaying because they've been predicting massive economic collapse for pretty much my entire sensate life and so far it hasn't come. Plus, at the moment they're playing their usual pre-election gloom-and-doom game in the hopes of helping the Democrats.
Which doesn't mean that the economy is necessarily doing better than they say, since their bias is exceeded only by their laziness and ignorance. As I noted some years ago about their Iraq reporting, the fact that they're transparently playing up bogus bad news doesn't mean that there isn't genuine bad news that they're not reporting, because reporting that would require knowledge and effort. So you can't just apply "Kentucky windage" and assume that things are better than the reports say. They may actually be worse, just in a different way than is reported . . .
There are a large number of recent proposals and actions by both Democrats and Republicans that fly in the face of any sort of capitalist belief system and will almost certainly serve to extend the depth and duration of the downturn. Bailing out homeowners? By whom? Renters? I shudder to think about how socialist we could become under a Democratic administration. The proposals by Clinton and Obama have been astounding.
Bottom line is that I am surprised by how little interest has been shown by conservative (or libertarian) blogs in the ongoing financial crisis. There seems to be no one in the conservative political blogosphere standing up against these dramatic expansions of government programs and interventions into our markets.
He's right about this. The bailout-and-regulation proposals seem more like payoffs and power-grabs than good policy to me. Anyway, here's a post by Professor Bainbridge that addresses some of these issues. And I love this bit: "bursting of bubbles inevitably leads to 'a kind of speculative frenzy in regulation.'”
We're probably seeing that now.
UPDATE: A hedge-fund reader emails:
Defending free markets and letting risk takers take their lumps is simply outside the realm of polite public discourse these days.
Most folks in hedgefundland are seething at the upcoming spin of the regulatory and tax ratchets, but the chattering classes only extol an expansion of the regulatory gobbledygook that got us here.
Bernanke's repeated blinking when confronted with chaos, first during the SocGen debacle in January and recently with Bear Stearns, left laissez faire folks no political cover.
Free market types assume silence is preferable to calling in mortar fire on themselves.
Well, that's a cheerful take. If the folks in hedgefundland are unhappy with what the Chattering Classes are saying, my suggestion is to do something about it. Emailing bloggers is a start, but only a very small one!
And Sean Hackbarth protests that he's been covering this stuff.
MORE: Thanks, Gerard. And it's hard to argue with this: "If They Could Do Math, They Wouldn't Have Been Journalism Majors."