Heh, I remember W.T. arguing some time back that Census Bureau data is the next thing to the Word of God (my description of W.T.’s view), because it comes from career public service employees. Then the Census Bureau data scandal came along...
More to the point here, seriously, I have come to believe both “economic data sets” (W.T.’s data, and what the rest of us experience and / or see as we simply look around), are generally valid, each for it’s own part of a sort of parallel reality.
There are a couple ways of looking at it. One breaks the world down into what I’ll call “Economic Reality 1”, which is where most productive families, small businesses, etc., exist, and which (to most Freepers anyway) needs no explanation. “Economic Reality 2” is a much more complex, and sometimes even bizarre world where non-productive activities somehow become a big part of GDP, economic statistics are “managed” for political and other purposes (thanks, kabar, for your explanation regarding health care spending!), huge deficits can be kicked down the road “indefinitely”, and much money exists on computers... somewhere...
Another way to look at it has already been suggested by several posters: Essentially, “Economic Reality One” is the same as described above, and “Economic Reality Two” is the “Upper Class” economy, say, those in the top 5% income bracket (to which I assume W.T. belongs.) “#1” can pretty much stink, while “#2” is doing fine — well enough to make the overall numbers appear ok.
A key here is that I am not attempting to refute the idea of a “trickle down” economy where upper income earners do well, and thereby pick up the middle and lower classes. However, what is rarely discussed is that while “trickle down” can work well in certain economies (Reagan, 1980’s), it doesn’t work in MOST systems. This is a complex subject — here I’ll just give the above as my opinion, which one may or may not agree with. And, I’ll add that present circumstances and gov’t policies are not conducive to a successful trickle down economy.
Neither are current policies conducive to individuals from the lower classes succeeding and making it into the top 5%. Crony capitalism and other policies exist to strengthen the position of the upper class, at the expense of the middle. (”Bootstrap” success still occurs in the US, it is just much harder for most, than in the recent past. Of several quite successful entrepeneurs I know, even with all the experience they gained along the way, none of them thinks they could today pull off the sort of “up from virtually nothing” endeavor that they succeeeded so well in.) When the middle class sees itself slipping, with little hope of upward success, there is a BIG problem, regardless of what data W.T. may post.
But, back to my main point, in either way of thinking of it, “Reality Two” can almost be it’s own world, and one can be quite successful in it for quite some time, even though the overall system may not be sustainable in the long run, or though the overall system is fundamentally flawed or weak. A sort of crude analogy is the Court of the Emporer with no clothes: So long as the Court behaves as if nothing is amiss, and no one / nothing else intrudes, the Court will most likely function just fine.
Eventually though, something or someone WILL intrude.
“Almost” is not 100%. In the long run, in our system, as ever more wealth is drained from the middle, the overall system, both economic and political, becomes more unstable. If the drainage is gradual, the system may stagger along for a long time, but, sooner or later, a “bubble” collapses, or some outside jolt will occur, breaking down the security / isolation of Reality 2. “2”, indeed, may well collapse further than Reality 1, or it may simply be destroyed by members of Reality 1. Innumerable revolutions in history, such as the French Revolution, come to mind.
Good post. I’m reading in an airport lounge so bear with me if I miss something. I might be in “reality 2” but there is a whole other reality of the top %1 and above. I deal with hedge fund investors on a daily basis as well as senior investment bankers and C level managers. They live in the world of which you speak. I make a good living but don’t reap the benefits of being able to set my own rules that are approved by complicit boards. There is a parabolic difference between top 5% and top 1%. I’ve seen shocking stuff done by those in that position. Stuff that would put them in jail if it was exposed. But they are all in on it together.
That being the case, I also deal with economic data on a daily basis. I’m in it all day long as it drives decision making at my organization. I have to piece it all together. My opinions of the economy are not driven by my personal reality. As I’ve said you guys can choose to ignore the data and constantly believe we are about to go down the tubes. Your choice. Maybe someday you’ll be right. But the data doesn’t show it and it’s why the equities markets are near all time highs.
Good discussion thanks.
Well said. I’ve never doubted the data or interpretations provided by Torch, but I just don’t see the silver linings regarding long term recovery. There is nothing in my “economic reality” (or anyone I know) to suggest anything of the sort. Hopefully I am wrong.
I am not so glum. America has invented an amazingly resilient system of government. There have been many episodes in our nations history in which we could have broken up. It’s true that crony capitalism is destroying our economy.
By crony capitalism I mean the intersection between politics and business in which the American political system is manipulated to benefit the few at the expense of the many. It’s been going on for a long time.
Yet, more and more Americans recognize the system as broken. There is a core 30-35% who are true believers and will never abandon the state. The balance is made up of conservatives and Mushies. The Mushies represent those swing voters who pay enough attention to vote, but too little attention to discern.
For us the challenge is to market conservative ideas, which are natural ideas, to the Mushies. The Mushies are afraid and go to the Mommy Party for what it provides. But, when the Mommy Party is failing they run to the Daddy Party. This is a historic opportunity for us and the Establishment knows it.
Millenials could end up being a very conservative generation. While they embrace multi-culturalism despite it’s lies, denial of history, and harm, they also play online games in which trading and economic success is as critical as in-game skills. What’s making the Clintons look like such buffoons is that they’re using the 20th century playbook in the 21st century.
We have the Internet and we can instantly find their lies. They look silly and don’t know it. Millenials can see that the emperor has no clothes.