A READER ASKS why I’m not blogging about the “disastrous economic news.” Trouble is, he’s not very clear on what he means. I don’t blog much about the economy (except on the micro, things-I’ve-noticed Andy Rooney level) because I don’t think I know enough. But I don’t see much disastrous news. The dollar has fallen against the Euro, which strikes me as potentially bad news, but probably worse news at the moment for the Eurozone than for the U.S. I believe this is bound up in an effort to force the value of the Yuan up (that’s the gist of this story, and an item (subscriber only) in the WSJ earlier this week suggested the same thing). Could it go bad? I guess so, but it’s not obviously disastrous, and I have nothing to say about it.
Is it “ballooning spending?” Spending’s a lot higher than I’d like, but it always is. Josh Bolten writes that the 2005 budget is under control: “Congress stayed within budget limits and met key priorities. While the appropriations bills are not perfect, they honor the goals President Bush set last February: Overall discretionary spending in Fiscal 2005 will rise only 4%, the same as the average increase in American family income.” Not exactly parsimonious, but not disastrous.
Then there’s global growth, which as David Brooks notes is quite rapid: “Some rich countries, like the U.S. and Japan, are doing well, but the developing world is leading this economic surge. . . . As even the cautious folks at the World Bank note, all developing regions are growing faster this decade than they did in the 1980’s and 90’s. . . . we’re in the 11th month of the most prosperous year in human history.”
Some of the commenters over at Pejman’s seem to think that the problem is that Americans are consuming too much and saving too little That’s probably right — just listen to Dave Ramsey’s show for half an hour — but on the other hand it’s probably behind a lot of that third-world growth, too. I’d certainly like to see us shift to a tax system that encourages savings and investment over consumption — but although such plans are out there, I doubt they’ll get much support from those commenters. But I won’t argue that, at the very least, the tax system should be neutral and that it probably ought to encourage saving and investment.
Is disaster looming somewhere? Maybe. But it’s not obvious enough that I can see it.
UPDATE: Social Security, of course, is a long-term problem, and Tyler Cowen notes that fixing it won’t be cost-free.