Monday, February 16, 2009

The Presidential Fearmonger

As I have discussed before, this rhetoric by President Obama is both irresponsible and unpresidential. Let's hope it stops.

President Barack Obama has turned fearmongering into an art form. He has repeatedly raised the specter of another Great Depression. First, he did so to win votes in the November election. He has done so again recently to sway congressional votes for his stimulus package.

In his remarks, every gloomy statistic on the economy becomes a harbinger of doom. As he tells it, today's economy is the worst since the Great Depression. Without his Recovery and Reinvestment Act, he says, the economy will fall back into that abyss and may never recover.

This fearmongering may be good politics, but it is bad history and bad economics. It is bad history because our current economic woes don't come close to those of the 1930s. At worst, a comparison to the 1981-82 recession might be appropriate. Consider the job losses that Mr. Obama always cites. In the last year, the U.S. economy shed 3.4 million jobs. That's a grim statistic for sure, but represents just 2.2% of the labor force. From November 1981 to October 1982, 2.4 million jobs were lost -- fewer in number than today, but the labor force was smaller. So 1981-82 job losses totaled 2.2% of the labor force, the same as now.


Lonnie Bruner said...

Greg Mankiw disagrees:

"In light of the diverse sources of information that the typical person receives, and the natural skepticism about what any politician says, I doubt that any president's rhetoric has a substantial influence on confidence."

James B. said...

Well I am not one to argue with Mankiw, but being a firm supporter of the president it is a bit of an odd position for you to take, that his rhetoric is not at all influential.

Lonnie Bruner said...

I just put Mankiw's comment because I know you like him. As far as what President Obama's rhetoric does, that's conjecture. I think in some cases it's influential and in others it isn't. Though I agree with you that he needs to nix the Great Depression references, etc.

James B. said...

Well yes, it is completely unmeasurable. The dismal science is vague as it is, there is certainly no "Presidential Pessimism Index".