More of the blinkered economic theories of Ezra Klein:
Some say [the economy hasn't recovered] because the European debt crisis took whatever confidence had returned and trashed it. Some say it's fear of new taxes and regulations. Some say recoveries are simply a bit uneven, and you have to wait out bad months to get to good months. Some say you can't underestimate the psychological impact of the economy's near-death experience, where storied banks collapsed and GM needed a bailout. Some say there's no demand for their product. But as things stand, there's a disconnect: It's not that businesses haven't recovered. They have. Profits are up. The stock market is up. Credit isn't perfect, but nor is it frozen. The problem is that they're not taking the next step and spending. The public sector stimulus hasn't given way to a private-sector recovery.
Eventually, they will take that step. Everyone agrees on that, as there's simply no other way for them to grow. The question is how do you get them to take that next step now, rather than months, or even years, from now? How do you make corporate American confident again?
The easiest way to do that would be for the economy to clearly recover, for growth to be strong and unemployment to be falling and the outlook to be rosy. A strong economy, after all, can withstand small shocks, and thus people wouldn't need to be so afraid of, say, Greece's budget. But the economy can't recover until the economy recovers, and to recover, it needs businesses to act like it's recovered. You see the problem.
If you don't see.... don't blame yourself; this strikes me as just about the useless economic assessment going, and that's kind of saying something in a moment of continued economic crisis. It's not that Le Klein's silly, exhaustive-ish, surely exhausting list doesn't offer some indications of analysis (it seems like a case of throw everything at the wall until something sticks), but mostly it's the trying too hard, missing the obvious, and the vast overgeneralization (the economy will be better when we all... just feel like it is?) that amazes me.
And sure, partly, this kind of sum up of "some economists say" is a good reminder about why we shouldn't consider economics to be an especially useful profession, but still; there are a number of bright, talented, thinking economists who do a much better job distilling the current waves of up and down, and reach more thoughtful conclusions than young Mr. Klein. And yet, there he sits, blogging away at the Washington Post - in their business and economics section, mind you - blathering away to beat the band.
I'm no genius, and this isn't the most fully formed theory, but this strikes me as a good start: we're not having a recovery because many people have not learned from the economic disaster we're still going through that we cannot return to the excessive levels of debt that were run up in the past 10 or 20 years (or arguably, 30-40), and unwinding that debt has turned out to be especially precarious and devastating across the world. In the US, the debt mistake was used to fuel a steep housing bubble, which rippled out into nearly every corner of the consumer economy. Undoing that, too, has proved difficult and often quite devastating. And if we can't go back to the familiar credit-driven consumer economy which masked other economic problems we have... then we don't have a great sense how to do it differently.
I don't begrudge Ezra Klein's success; he's a nice young man, seems like a decent-ish writer, thinks on his feet, etc. But he's not an especially good, or well trained, writer on economic issues. He was, up to a point, a relatively interesting writer on health care issues during his early blogging years and as an up and coming writer at the American Prospect, though even there he was often densely naive about aspects of the health care systems he didn't fully understand, a trait which simply got worse at the WaPo during the healthcare reform debate and made much of his later asessments of little real use, except to affirm the status quo. There is, clearly, a job in that, though why that's so continues to mystify me. It's not bitterness or jealousy... but I just have to come to the conclusion that we can't have an economic recovery driven by "reporting" as vague, incomprehensible, and vapid as Ezra Klein's. And if the Washington Post can't make the kind of business decisions that would help them provide better, more useful content, and improve the quality of the thing they're supposed to be selling... I'm not really sure we're going to have an economic recovery anytime soon. It's not that he's wrong... it's that he's proof of the kind of bad business decision making that got us to this mess, and keeps us there.
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