Who can I believe about the economy?

The problems in our economy right now are real, I believe. Tons of people have lost jobs, and my investment accounts also prove it. I guess there's no debate about that. But the question is, what to do about it.

My observations:

  • Politicians on both sides are equally passionate yet totally contradict each other about what they claim to be 'facts'.

  • The most glaring one is, for me, "are tax breaks stimulative or is government spending stimulative?

  • I mean this is a case where apparently intelligent adults are calling the sky red and the grass blue.

  • It's not like they say, "well experts have trouble understanding this but I really believe that the sky is red and the grass is blue". It's more like, "every single expert out there agrees with me, and if you don't you're a dope."

What to do? Here's where I come out:

  • I don't believe any politician, left or right. They are all lying. Ok, they would call it "framing" but the fact is there are  no facts (I am a little  more inclined to believe the President, but even there...)

  • I know that I can't personally determine whether tax breaks are stimulative or not, or whether government spending is stimulative or not, let alone whether either one will 'work'.

  • I decide to believe experts I whose opinion and prescriptions I read in the newspapers and hear on TV. I look for experts who don't have an axe to grind and seem intelligent, thoughtful, and not a shill for one or the other party.

You may ask, then, what do I read and what do I watch? In the end, the person who I have decided is making the most sense is Paul Krugman. He happens to appear in the papers and tv stations I watch. So I side with his prescriptions:
"A not-so-funny thing happened on the way to economic recovery. Over the last two weeks, what should have been a deadly serious debate about how to save an economy in desperate straits turned, instead, into hackneyed political theater, with Republicans spouting all the old clichés about wasteful government spending and the wonders of tax cuts." (from"On the Edge")

"Would the Obama economic plan, if enacted, ensure that America won’t have its own lost decade? Not necessarily: a number of economists, myself included, think the plan falls short and should be substantially bigger. But the Obama plan would certainly improve our odds. And that’s why the efforts of Republicans to make the plan smaller and less effective — to turn it into little more than another round of Bush-style tax cuts — are so destructive. " (from"On the Edge")

And then in the end I also fall back on the common sense approach: "If you find that you've dug yourself into a big hole, the first thing to do is STOP DIGGING". Let's face it, we are in a crisis right now, and we know who was in charge and what policies were in charge to get us here, so I guess it's time to try something else.
Posted on February 8, 2009 and filed under Life, Politics.