Monday, July 14, 2008

The truth hurts - especially if it isn't politically correct

There's been a lot of discussion about comments by former Sen. Phil Gramm, a top economic adviser to presumptive GOP nominee John McCain, that were published in an interview with The Washington Times.

The Times said Gramm said he expects a McCain administration would inherit an economy “weighed down above all by the conviction of many Americans that economic conditions are the worst in two or three decades and that America is in decline.”

The Times quoted him as saying: “You've heard of mental depression; this is a mental recession. ... We have sort of become a nation of whiners."

“You just hear this constant whining, complaining, about a loss of competitiveness, America in decline. ... We've never been more dominant; we've never had more natural advantages than we have today.”

No, we're not yet in a recession - at least not by the definition of a recession - but let's not bother with the facts of the situation because we 'feel' like it's a recession - and 'experts' tell us a recession is coming, while politicians tell us they'll save us from any inconvenience.

Gas prices are high, it's true. But they've gone up in the past and we managed to survive. In fact, despite the high prices, we have no shortages of supply. Having lived through the shortages of the '70s when we could only purchase gas on a even-numbered day because our license plate ended in an even number, an increase in pricing isn't as bad.

Yes, there are problems in the housing industry, but we're talking about less than 10% of all mortgages being in trouble (no matter whose number you choose to use, estimates are below 10%). While that is certainly bad news if you're in that 'under 10%,' it also means that over 90% of mortgage holders are doing fine. And yes, there are problems with banking and financing due to fears that the mortgage crises may expand. But banks who've issued bad loans should pay the penalty for doing so, as much as (perhaps more so?) the individuals who took out loans they knew they couldn't afford.

Stocks go up and down, but the Dow closed Friday at 11,100.54. Do you remember the big deal when only a few years ago we watched to see if it would break 10,000? The nature of stocks is to go up and down...they always have and always will, so big swings should not come as a surprise.

June sales reports from the nation's retailers showed better-than-expected results at discounters and wholesale club operators, even though mall-based stores were down. This means that people are still buying, even if they've changed WHAT they're buying or making decisions to seek out lower prices. This, too, has happened in the past and will probably happen in the future as well.

But media reports and politicians tell us things are dire. Candidates focus on people who are in need so they can offer a solution. If you don't have a need they can solve, why do you need the candidate? (hint: you don't!) They appeal to the emotions and hope you'll vote for them because they'll make all your troubles go away.

And it is this constant barrage of bad news and heart-breaking stories of people who've made bad decisions and now think someone else needs to take care of them to prevent them from suffering any consequences. Every news story and candidate starts with the 'personal' story - a single example of a bad situation that means things for everyone are as bad (if you're the news media) or that everyone is in need of your proposed solution (if you're a candidate).

I doubt many people these days could tell you what defines a recession, but Phil Gramm is right: we certainly know how to whine about it. As a nation, we've become used to having things so easy that any time a bit of a hardship comes along, we instantly turn to elected officials to make it go away.

Gas prices doubled? Congress must act. Funny, though, that when car prices go up, we don't demand similar action. You used to be able to buy a good sedan for under $10,000. Today, most sedans with any type of amenity (like air conditioning) start around $20,000. Why aren't we all clamouring for Congress to do something? Is it because we don't demonize big car companies they way we demonize 'big oil'? Or is it that as much media attention isn't directed to that price increase?

We've become a nation that likes to have all problems solved in 30 minutes - like a sitcom. We whine when things don't go our way and many of us really have no idea how to actually take care of ourselves. While some people in the path of Hurricane Katrina waited for 'guvmint' to save them, those in the Midwest who lost everything in floods quietly started their cleanup and went about the task of rebuilding their lives. No celebrities rushing to their aid and no stories about how it was all the fault of the president.

A difference between whiners and doers? Perhaps. Or perhaps a difference in the mindset or upbringing that distinguishes between being a victim forever, or doing what you can with what life has thrown in your path. But there wasn't a lot of 'whining' with the floods, regardless of the reason.

Personally, I don't want a politician who's going to take care of me. I wouldn't 'whine' to a politician that my problem demanded a national solution. I want my national elected officials to protect my Constitutional rights and to do what the Constitution mandates and no more. I want them to spend less of my money on 'whiners' so I can keep more if to keep from being a 'whiner' myself. I don't want them using a single example of a bad situation as a justification for whatever solution they're offering. But I would like them to know and be able to explain what the Constitution and amendments require of them. Funny - no one ever asks presidential candidates to explain the amendments or the Bill of - that's not as photogenic as a struggling family who will be saved by whatever latest program is being pushed by that same candidate. It's so hard to put a face on 'the right to free speech.'

The bigger truth of Gramm's statement is the lack of knowledge that leads to our current situation. If people don't know what defines a recession, they are free to define it themselves - and then it can mean anything. If people don't understand how a free market or economy is supposed to work, they can whine about what they 'feel' is a lack of 'fairness' within the economy. If people aren't educated as to their responsibilities that go along with their rights - or even about the source of their rights, they will turn to government to 'give' them more 'rights' and to protect them from any negative consequence from failing to be responsible.

Kind of like what we've got today.

So Phil Gramm is right, but he's not politically correct, and under the bus he is thrown. That's too bad, because rather than 'feeling our pain,' we could certainly use some straight talk and 'tough love.'


Tim Higgins said...


There is little doubt that both former Sen. Graham and you are correct. Unfortunately we are in an election year. You don't win elections by being right, you win elections by telling someone what's wrong with their lives and who to blame for it (obviously not themselves). Then you promise to punish the "bad guys" and bring back the "good old days", knowing that neither feasible or is possible.

Isn't it a shame that at a time when we choose our leaders that one of them must distance himself from, and another former one must be ostracized for refusing to apologise for ... the truth?

Publius said...

I agree whole-heartedly. I have been trying to say this for a while now. The media keeps hammering away that we're in a recession when we aren't. We may be close, but it hasn't happened yet. What's worse is that the data (especially in housing) is leveling off. This should be good news, but no one is reporting it.

Publius aka Luke

Hooda Thunkit said...

They'll only report the bad because they can make a story of it.

There's no story in saying that we're 95% employed or that 96% of people with mortgages are paying them.

No news in that. . .

Robin said...

I think the word "recession" has been over used. It seems like we've been in one for oh... at least three years, now.

Times are tough for a lot of people, though.

I wondered where the rally cry was for the people in the midwest who have lost everything in the recent spring/summer floods and tornados. I wonder what makes one natural disaster more important than another.

Tim Higgins said...

One of the things that we need to understand about the economy right now is that it isn't in a vacuum. People in the Stock Market, hedge funds, and businesses read the papers (and the tea leaves) and understand that it is a better than even bet that we will see a Democratic President and a Democratically controlled Congress.

It is little surprise therefore, looking at the taxes and regulations which are bound to follow, that they are less than enthusiastic about the future. This dirty little secret is not being talked about in the financial market media (or any other), but has to be a huge contributing factor to the fact that the economy is not snapping back as expected.

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