Posted on 06/24/2008 1:10:34 PM PDT by jazusamo
It must be a bitter disappointment to those in the media and in politics who have been dying to use the word "recession" that, for the second quarter in a row, there has been no downturn in the economy, though growth has been slow.
Alarmists have been reduced to quoting other alarmists on the supposedly impending recession but that is still not the real thing.
The definition of a "recession" is very clear and straightforward: Two consecutive quarters of negative growth. We have not yet had one consecutive quarter of negative growth.
The fault-finding brigades of critics of the American economy and society are among the reasons why there is so much talk about how we ought to do things that are being done in Europe.
We need to understand America first, before we start imitating Europe.
The American economy produces the largest output in the world— more than Japan, Germany, and Great Britain combined.
Measured by purchasing power, output per capita in the United States is the highest of any large nation.
There are some very small places like Luxembourg or the Cayman Islands with higher purchasing power per capita but, as Professor Benjamin M. Friedman of Harvard put it, places like Luxembourg are "technically countries but are more like large suburbs." Luxembourg's total population is about the same as that of Long Beach, California. Wal-Mart has more employees than the total population of Luxembourg.
Some other small places like the Cayman Islands are tax havens that attract the wealth of people who are not really Cayman Islanders.
Among countries at all comparable to the United States in size or population, none has achieved as high an output per capita. New Jersey produces more than Egypt. California produces more than Canada or Mexico.
Desperate efforts to depict all the prosperity and progress in the United States as being monopolized by "the rich" have led to all kinds of statistical mumbo jumbo, such as comparing the changing ratios between statistical categories over time and ignoring the fact that most of the people in those categories move from one category to another over the years.
Studies that follow given individuals over time show the exact opposite of what is being said in the mainstream media and in politics. That is, most of the working people in the bottom fifth of the income distribution rise into the top half, and the rate of increase of their incomes is greater than that of most of the people initially in the top fifth. Those individuals in the top one percent, as of a given time, actually have an absolute decline in income over time. As they drop out of the top one percent, they are replaced by others, so the statistical category can be doing great, while the flesh-and-blood people who pass in and out of that category are by no means gaining on those further down the income distribution.
None of this is rocket science. But most people in politics, in the media and in academia still insist on using statistics based on the fate of abstract categories over time— households, families, income brackets— even when other statistics, based on following specific individuals over time, are available.
Households and families vary in size from group to group and are generally declining in size over time, but an individual always means one person. Income per household or family can be stagnant, or even declining, while income per person is rising.
That has in fact been a general pattern in recent decades, which may be why the nay-sayers are forever citing household and family income statistics, while ignoring statistics on income per person.
Amid a general undermining of American economic performance, it is hardly surprising that so many people think we should imitate what the Europeans are doing— whether in the economy, in foreign policy or in other areas.
We can always learn particular things from other countries, whether in Europe, in Asia or elsewhere. But imitating Europeans when they are not doing as well as Americans makes no sense.
“...imitating Europeans when they are not doing as well as Americans makes no sense.”
Right on the mark once again Dr. Sowell is.
It makes no sense unless one thinks perhaps those wishing we imitate the Europeans are of say..Socialist persuasion? Perhaps they have an “agenda”?
When the Bush tax rate cuts expire, then look out.
On the mark, RQSR and there’s no perhaps about it.
I’m a BIG fan of Sowell, but what does this statement mean? “We have not yet had one consecutive quarter of negative growth.”
As far as I know, a single data point (one quarter of financial performance) cannot be consecutive, there has to be 2 or more points. A single point is singular. This is a grade school level error, although it does no damage to his argument.
Yes, and the RATS will make it happen.
+1
The facts we learn from this good man are incredible.
This fact will be used to neutralize the libs when they have orgasisms touting Luxembourg:
“Wal-Mart has more employees than the total population of Luxembourg.
I noticed that also. I don’t pretend to know the reason for this column but a short time back on one of his columns the wording was changed (by an editor I guess) at one of the sites printing it and it was printed correctly at other sites, it was clearly an editors fault.
I certainly smiled when I read it.
I liked that line too, Grampa Dave! It's the sort of cold hard truth that will send libs into catatonic fits! LOL!
I’m chuckling with both of you, it’s such a simple yet profound fact. LOL!
“what does this statement mean? “We have not yet had one consecutive quarter of negative growth.””
I think the noted economist is being facetious. He likely means that we have not had not seen negative growth.
A number of media "experts" came rushing forward to declare this an outmoded and inaccurate definition, always with their own new one declaring that it is, after all, a recession. As far as I'm concerned, Sowell has spoken. Any one of them wants to bump economics credentials against his, I'll buy a ticket.
For a decade or more, we get the greatness of Luxembourg thrown into our faces.
Now we can laugh at them with our Walmart comment.
You got that right, Bill. Dr. Sowell sticks to proven facts and the enemedia revises them to fit whatever they want them to be on that particular subject.
“I’m chuckling with both of you, it’s such a simple yet profound fact. LOL!”
So far this week has been one where simple and profound facts like this one re Luxembourgh and the Walmart employees are striking home and making me have some good laughs.
That’s what I got out of it -
he was making further fun of the naysayers by using the phrase “one consecutive quarter”.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.