Cause for skepticism

We learn again, today, that the recession is over. I'm not buying just yet. The people exclaiming that the worst is behind us are, by and large, the same people who kept on insisting that a recession was impossible until almost the moment it was upon us. For instance, here's Congressman Ron Paul in his book End the Fed, talking with Federal Reserve Chairman Ben Bernanke on July 18, 2007, two weeks before the collapse of Bear Stearns:

Ron Paul: War, sometimes, is not healthy for a currency for keeping prices down, at least inflation. It's hard to find, in all of history, when war didn't create price inflation because, even in ancient times, countries resorted to clipping coins and diluting values or whatever... And yet, in the seventies, we had consequences of guns and butter. Now we're having guns and butter again (we're having consequences) and it just looks like we may come to a [stagflation situation as in] '79-'80. Do you anticipate that there is a possibility that we'll face a crisis of the dollar such as we had in '79 and 1980?

[At this point, Bernanke maintains that the Fed will maintain stable inflation--whatever that is--so Paul insists he answer the question.]

Ben Bernanke: I'm not anticipating a problem like '70-'80. (pp. 102-3)

Now, it is presently too early to tell whether or not we will see stagflation again, though it remains a possibility. The salient point is that Bernanke could not conceive how such a situation could come about under his reign. Quite obviously, the central bankers didn't have things under control, or they would have been able to steer us past this crisis. There is an argument that they have in fact done so, which we'll get to in a bit; what's inarguable is that they botched things this time around.

I should also add that while I don't think anyone can steer around economic crises by injecting credit into the economy since this is the precise mechanism which causes crises, I take it for granted that the central bankers do believe such a thing is possible. If you're keeping track at home, this means that on the side of possibilities we have an end to the boom-bust cycle, and on the side of impossibilities we have the reemergence of a phenomenon which came into existence as little as thirty years ago.

No one will deny that the crisis caught Bernanke, as well as most mainstream economists, completely unaware. Notes to the meetings at which bankers set monetary policy may be safely hidden (End the Fed, pp. 95-9)--for the good of the people of course--but, until the State finds a way to control it, the Internet provides a record for posterity. One might think, then, that the false prophets who insisted that everything would go on swimmingly--forever--would be ignored. And, in fact, some of them have been regulated to the dustbin of history; but it remains quite advantageous to be optimistic, even over something which one knows nothing about--at least when it comes to the economy.

Perhaps this is merely human nature. We gawk at car accidents; but only if we're not participants. We want to believe that things are getting better, yet this alone is not evidence that things are, in fact, improving. We may hope that the optimists are right. But the pronouncements of those who insist that the worst is behind us, and that the recession is now over, should be met with the same caution which should have greeted those who insisted, scarcely more than a year ago, that the good times would roll on forever.

Endless war

The number of times in which the accepted wisdom differs from the actual facts is not insignificant. This is especially true when it comes to the realm of politics. To give but one example: it is widely bemoaned that Republicans wish to turn back the clock on abortion, forcing reluctant mothers into alleyways to destroy their progeny. In point of fact, very few Republicans care one iota for abortion, as evidenced by their paltry record in curtailing, however slightly, this barbaric practice.

A similar illusion exists when it comes to war. In the minds of most, the Right wages war, while the Left opposes them. Of course, this doesn't comport with the historical data: most wars have been started by Democrats. But setting aside the American paucity of memory, we cannot even be relied upon to stay focused on the narrative long enough to realize that it is a lie. For though we have elected a Democrat, the wars continue.

Setting aside all of the ridiculous non-wars which nonetheless share that appellation, we are presently fighting two. The first, according to the narrative, was the "necessary war" in Afghanistan. The second, the "unnecessary" one, is in Iraq. Following his election, Obama insisted that we would withdraw from Iraq by 2011. But as with his predecessors "mission accomplished", there is more than a little hyperbole in the assertion. 50,000 troops will remain even then, so Iraq will be occupied long after the war is officially over. Sort of like Germany, or Japan, or South Korea, or...

Meanwhile, despite the deadliest month of fighting in Afghanistan since we first invaded, we're still mired in a war which cannot be won. Worse, Obama continues to waver over whether or not he will send more troops to die in the region. I say this not because I support such a measure, but because if you seriously believe the war can be won, you have to take the necessary measures to achieve victory. It's hard to escape the conclusion that Obama is content to allow the war to continue endlessly as long as it doesn't hurt him politically.

(In this vein, I fully expect him to compromise by sending enough troops to the region for his supporters to claim he's working toward victory, while his detractors can insist he's not supporting the troops--but we'll see.)

What's extraordinary to me about this is not the betrayal the more principled, if naive, Obama supporters are bewailing. After all, anyone who was paying attention knew that if Obama was less likely to bomb Iran than was McCain, he was not at all likely to do anything about either of our wars. Instead, what I find amazing is how the narrative hasn't changed. The Democrats are still seen as the pacifists. Would that they were! The wars might actually end.

I wish I could say I see a way out. Alas, so long as otherwise sensible opponents of war are not a threat to go against Obama, he will be able to keep the wars going. After all, antiwar democrats aren't going to vote for the other guy--whoever he is. So Obama gets to act as if he's tough on terror for the affordable price of a hundred or so dead soldiers a month. Is this a great country or what?