I guess I’m naturally an optimist, so I liked this piece by Brad DeLong. No one claims that the economy is in great shape, but given a longer and larger view, what we’re seeing is a medium sized bump in the road. I can testify to that - I’ve experienced some of the big bumps and this isn’t one of them (yet?).
But there is still plenty of work to do. The WSJ, ever mindful of investors, does a nice job of outlining the overall problem. And some parts of the country are committing mistakes on a wholesale level - witness California, Michigan, and New York.
I’m a long term optimist but a short term pessimist. There is growing public support for expanding the size, scope, and role of government. We’ve been there before in the Johnson-Nixon-Ford-Carter years. Thing had to get pretty bad before revulsion set in and we moved in the opposite direction with Reagan-Bush-Clinton. George W. has re-started the growth in government movement and Senator Obama and the Democrats want even greater growth. I fear that they will prevail and we will again have to again wait until revulsion sets in.
If the economy does well, revulsion may take a while. Our economy is amazingly resilient, withstanding the predations of Democrats and Republicans alike. That’s the good news. The bad news is that we would be way so much better off under a better scenario.
