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Jewish World Review
July 24, 2008
/ 21 Tamuz 5768
Cheer up these are the good old days
ARE YOU anxious? Dejected? Fearful? Why wouldn't you be, considering the barrage of rotten news assaulting you from every direction?
"Everything seemingly is spinning out of control," moaned the apocalyptic headline on a recent AP dispatch. "Midwestern levees are bursting. Polar bears are adrift. Gas prices are skyrocketing. Home values are abysmal. Airfares, college tuition, and healthcare border on unaffordable . . . Americans need do no more than check the weather, look in their wallets, or turn on the news for their daily reality check on a world gone haywire."
Thanks in part to journalism of that caliber, consumers are more apprehensive than they have been in decades. Consumer confidence is at a 16-year low, and more Americans than ever, 84 percent, think the country is headed in the wrong direction. The New York Times devoted one-fourth of Saturday's front page to illustrating ways in which the economy is mired in "A Slowdown With Trouble at Every Turn" - and continued the gloom for a full page inside.
Voices of reason keep trying to point out that conditions are not nearly as bad as they were the last time consumers were this despondent. That was in May 1980, during the final year of the Carter administration, when the "misery index" - the sum of the inflation and unemployment rates - hit an excruciating 21.9. Inflation was then at 14.4 percent; unemployment was 7.5 percent. The numbers today are 5 and 5.5 respectively.
But voters don't want to be told to buck up. When former senator Phil Gramm, an economic adviser to John McCain, said last week that America had "become a nation of whiners" and described the current slowdown as a "mental recession," the backlash was immediate. McCain repudiated Gramm's remarks and quickly issued a statement assuring voters that he "travels the country every day talking to Americans who are hurting, feeling pain at the pump, and worrying about how they'll pay their mortgage."
Well, that's politics. Politicians who want to get elected genuflect to what Bryan Caplan, in "The Myth of the Rational Voter" calls the pessimistic bias: the "tendency to overestimate the severity of economic problems and underestimate the (recent) past, present, and future performance of the economy."
For a nonpessimistic view, hearken to W. Michael Cox and Richard Alm of the Federal Reserve Bank of Dallas, who in the current issue of The American ask "How Are We Doing?" - and offer some useful perspective. The nation's present troubles, they argue, "will turn out to be mere footnotes in a longer-term march of progress." The US economy, "a $14 trillion behemoth," remains without equal as an engine of growth and prosperity. However impolitic it may be to say so, when you take the long view it is clear that we have never had it so good.
Cox and Alm point to an array of reassuring trends.
Americans on average work far less than they used to. Annual hours devoted to the job have fallen from 1,903 in 1950 to just 1,531 today. We start working later in life, retire earlier, and live much longer. Even including household labor, they write, "only about a quarter of our waking hours are consumed with work, down from 45 percent in 1950."
The material progress of recent decades has been extraordinary - at all income levels. Forty percent of poor families own their own homes. For many goods (kitchen appliances, color TVs, air conditioners) ownership rates are higher among poor Americans today than they were among the general population in 1970.
On highways and in the air, we travel billions of miles more than we used to, yet death rates are at all-time lows. Healthcare is more expensive, true, but quality is much better. Real total compensation - wages plus benefits, adjusted for inflation - has been climbing for generations. And if prices are calculated as a function of work-time - how long one must work at the average pay rate to earn the price of something - a gallon of gasoline, even with the runup in pump prices, "still goes for less than 11 minutes of work."
Short-term troubles notwithstanding, Cox and Alm observe, the "data points add up to steady, continuing progress for average Americans." So no, everything is not spinning out of control. Alarmist headlines notwithstanding, we're doing all right. Buck up.
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Jeff Jacoby is a Boston Globe columnist. Comment by clicking here.
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