The Pitch and the Promise in Presidential Economics
Given that the concept of long-distance running has already been introduced into the public discussion of the presidential campaign, it’s as good an analogy as any other for a point related to former President Bill Clinton’s convention speech, last night.
Running races requires different strategies — different pacing — depending how far you’re going. Starting out a marathon with a full-on sprint for 100 meters would not be the best way to reserve energy for the rest of the distance. And saving energy for the fourth lap around a track is a waste if the finish line appears at the end of the second.
Dan Yorke spent a bit of time, today, talking about this portion of Clinton’s speech:
I like the argument for President Obama’s re-election a lot better. He inherited a deeply damaged economy, put a floor under the crash, began the long hard road to recovery, and laid the foundation for a modern, more well-balanced economy that will produce millions of good new jobs, vibrant new businesses, and lots of new wealth for the innovators. …
I understand the challenge we face. I know many Americans are still angry and frustrated with the economy. Though employment is growing, banks are beginning to lend and even housing prices are picking up a bit, too many people don’t feel it.
I experienced the same thing in 1994 and early 1995. Our policies were working and the economy was growing but most people didn’t feel it yet. By 1996, the economy was roaring, halfway through the longest peacetime expansion in American history.
The problem is that Clinton’s descriptions of a floor and a “long hard road” aren’t what the current president sold, as Glenn Reynolds reminds readers on an almost daily basis with a single chart. Things were supposed to be notably healthier, by now. This is a bigger logical problem than just a cute talking point that focuses on a single bit of data to distract from the broader picture.
All indications are that Barack Obama implemented policies with a view toward a much more rapid turnaround. Otherwise, he would have undersold his expectations, instead of overselling them. And if a leader’s first priority is long-term stability, that calls for different economic strategies than a quick recovery.
An excellent example can be found deep within a front-page story by Kate Bramson in today’s Providence Journal. It’s about a job-search assistance center that the state Department of Labor and Training (DLT) is now planning to close. The relevant part is the reason:
The DLT laid off nearly 70 employees this summer. As a result, wait times for those who must call the DLT each week to certify that they remain unemployed have gone up.
Many of the cuts are related to the end of the American Recovery and Reinvestment Act [ARRA] funds, DLT spokeswoman Laura Hart said.
Enacted by Congress and signed into law by President Obama in 2009, the economic stimulus package invested in work-force training and allowed states to hire employees to expand services for the unemployed.
Now that support is running out, even though pockets of the country are struggling to recover from the Great Recession.
ARRA propped up the public sector and poured some money into various job-assistance and job-creation programs, but it was not well designed if a long-haul recovery was the plan all along. Us small-government free-marketers think that a long-term strategy would have been built around a core of letting risk-thwarted companies suffer the consequences and easing up taxes and regulations to soften the blow to other folks in the productive economy. But readers needn’t agree with that to understand the point that the steps taken didn’t appear then, and definitely don’t appear now, to have anticipated a slog.
Instead, the political strategy now appears to have been to run the 100-meter dash and then, upon losing the race, to insist that everybody keep going because two laps were intended all along… then three… then four.
Recognizing Who’s Better Off
Leave it to Providence Journal columnist gone national Froma Harrop to find an unexpected way to illustrate an important, but not much highlighted, divide in the United States that the financial crisis, pension crisis, and municipal crises have all made clearer and clearer in recent years:
… never having treated my house as a retirement plan, I always deposited as much of my paycheck as I could into my 401(k) plan and Individual Retirement Account. I also kept a separate, conservatively run investment account. Swooning stock values had robbed a big chunk of those savings. That stressed me out. But the sharpest anxiety came from not knowing when and where the chaos would stop. I also fumed that this middle-class anguish was unleashed by a made-in-Washington crisis. It was the result of a paid-for governing class arranging the country’s laws and economic policies for the massive enrichment of financial speculators.
Four years later, my investment portfolio has recovered, though not my house price. The financial markets have stabilized, and my nerves no longer jangle in anticipation of the next headline. So all in all, am I better off than I was four years ago? I’d say yes. And so would most of us, if we really thought back to September 2008.
Readers with long experience with Harrop will spot the characteristic way in which she neatly separates her own reliance on the investment economy from “financial speculators” as if there’s some wall in the world of equity and bonds that makes the ’umble upper-middle-class retirement investor somehow less involved than the folks who explicitly make their livings in finance.
The real divide can be seen with reference to another chart. During the time that has made Froma better off, skyrocketing government debt appears to have fed directly into making investors whole, rather than into GDP. So, if we turn our eyes from the heights of the economic pyramid to the rest of us, the people who are doing better are those, like Harrop, with secure jobs and sufficient income to invest for retirement. The people who are doing worse are those who’ve needed to find jobs or to climb the economic ladder… not to plan for their end-of-life vacations, but to provide for their families and survive right now.
Turning to overall middle-class trends during the past decade via an essay by Jim Tankersley, it’s easy to see the division that separates a late-career journalist like Harrop from a broader swath of the middle class:
In the past decade, the middle class has endured a real-estate bust that wiped out two-fifths of median household wealth; seen millions of traditional middle-class jobs vanish as the nation hemorrhaged “middle-skill” manufacturing and service work that does not require advanced training; and watched as the income gains from expanded foreign trade and increased labor productivity accrued largely to a small group of Americans at the top of the income distribution.
Long in the Fall Can Be Quick in the Spring
Did you catch this, from Ted Nesi’s blog?
This is something too often missed in all the debates over Rhode Island’s economy – after starting at parity after World War II, the state has spent six decades losing ground economically to its neighbors, particularly during the 1980s and 1990s. That’s a major problem for a variety of reasons, many of which were noted by Josh Barro in his must-read post from May.
More than anything, perhaps, that helps to explain local politicians’ attitude that they can twiddle their thumbs while the national economy goes through its oscillations. In the short-term, riding the national wave may look like a workable (if pitiful) approach. Back up to the space of a century, however, and the long drift downward becomes more visible.
I disagree, though, with something Nesi quotes from Slate‘s Matt Yglesias:
[T]he truth is that it’s very difficult to alter to the long-term trajectory of a state’s economic fortune. That’s primarily because people can move. If Mississippi starts doing a much better job of preparing its students to succeed in higher education, a lot of those people will probably leave and move to higher-income states like Connecticut or Massachusetts.
Rhode Island’s size and geographical advantages should make it easy to persuade enough people to move here to make a world of first-world difference… if we change our attitude in the right way. Doing so, though, requires rejecting Yglesias’s erroneous assumption: He presents as his only example the improvement-strategy of “preparing … students to succeed in higher education” (translation: “investing in public education”).
What he skips right over is the possibility that a state could make itself the kind of place that those smart Mississippi students decide to move to, or even that a state could improve its lot by allowing young natives to succeed without (gasp!) indenturing themselves for fancy degrees.
Consistency of Mail Ballots in Cicilline-Loughlin Race
Out of curiosity, I recently checked the vote totals for the 2010 Congressional district 1 race, and although there’s nothing that merits headlines even in light of recent voter fraud accusations, I found the results surprising.
Statewide, Democrat David Cicilline beat Republican John Loughlin 78,271 to 69,038, which is a percentage point spread of 6.3 if only these two candidates votes are counted. On mail ballots, it was 2,998 to 2,504,or 9.0 percentage points. For Providence, the numbers are 11,789 to 4,576, or 44.1 percentage points, in polling places and 452 to 159, or 48.0, in mail ballots.
Of course, the most striking observation is that around 78% of Cicilline’s vote margin came from Providence. But the surprising thing is that Cicilline beat Lieutenant Colonel Loughlin in statewide mail ballots during an era of active military deployment overseas.
I also wouldn’t have expected the percentage point differential of mail ballot to polling place to be so close when comparing Providence to statewide results. Statewide, Loughlin went from 46.9% of the two-candidate vote at polling places to 45.5% for mail ballots; in Providence it was 28.0% to 26.0%. That’s a pretty consistent shift from one ballot type to the other.
At this depth of fiddling with numbers, it’s extremely easy for statistical coincidences to give the illusion of significance, but all in all, that’s not what I expected to see.