Worst economy since Herbert Hoover?

[Plan_B]

That’s what John Kerry said in 2004, but George Will disagrees. In today’s column Will points out that:

“Since the Bush tax cuts went into effect in 2003, the economic growth rate (3.5 percent) has been better than the average for the 1980s (3.1) and '90s (3.3) . Today’s unemployment rate (4.6 percent) is lower than the average for the '90s (5.8) - lower, in fact, than the average for the last 40 years (6.0).”

And that’s after the 9/11 trillion dollar hit and the recession which started with the internet bubble bursting in 2000.

I’m inclined to agree with Will on this.

[Blaster_Master]

Link to the column?I’m not convinced the of relevance of the numbers you provided. Are those recent numbers, or numbers from about the time Kerry said that? Why are all the numbers only compared to the 80’s and 90’s and not to the great depression? Is this article even related to Kerry’s statement?

I’m also curious with what your proposed debate is. Are you just curious if Kerry was talking out of thin air? I’d tend to agree that the economy has approached the great depression, and its a gross exaggeration to say so. If those numbers were similar then, I’d think you’d have a hard time finding anyone that would patently disagree with you that the economy isn’t better. Are you proposing that Bush’s tax cut is responsible for the booming economy? Chances are, you’ll find some people who will disagree with the proposed cause.

To answer both: Yes, comparing the modern economy to the great depression is ludicrous. I do tend to believe that tax cuts help to stimulate the economy, but I’m not going to give the credit to any one or party in particular. I’m humble enough to realize there’s plenty of other factors at work besides, and the tax cut is probably one of the lesser ones.

[Blaster_Master]

[QUOTE=Plan B]
Today’s unemployment rate (4.6 percent) is lower than the average for the '90s (5.8) - lower, in fact, than the average for the last 40 years (6.0)."
[/QUOTE]

Oh, I forgot to respond to this. A lower unemployment rate isn’t always a good thing. At some point, it starts to become a work shortage, which can be bad nearly as bad as too many unemployed (inflated wages, high turn around, underqualified employees, etc.). Now, IANA Economist but, IIRC that crossover point from worker surplus to worker shortage is somewhere around the 4-5% area. I’m sure someone more knowledgable on the subject can correct that undoubtedly incorrect number.

[Voyager]

[QUOTE=Plan B]
That’s what John Kerry said in 2004, but George Will disagrees. In today’s column Will points out that:

“Since the Bush tax cuts went into effect in 2003, the economic growth rate (3.5 percent) has been better than the average for the 1980s (3.1) and '90s (3.3) . Today’s unemployment rate (4.6 percent) is lower than the average for the '90s (5.8) - lower, in fact, than the average for the last 40 years (6.0).”

And that’s after the 9/11 trillion dollar hit and the recession which started with the internet bubble bursting in 2000.

I’m inclined to agree with Will on this.
[/QUOTE]

I’m really sick and tired of the Republicans spouting this stuff to try to counter the fact that most people in the country don’t think the economy is so hot, and for good reason. “Worst since Hoover” is clearly hyperbole, since the Depression didn’t end in early 1933.

Unemployment may or may not actually be lower - we don’t know how many are out of the job market. Plus there is a lot of underemployment, as people who have been laid off have only found lower paying jobs. However, wages have gone nowhere for the past six years, while productivity has improved and profits have dramatically improved. Worse, the Republicans do not seem to think this is a problem - they only think increasing the minimum wage is a problem.

If you are well off, if you make money from dividends or from the market, if you have a rare skill that is in demand, then you’re in good shape. If you work for a living, not so much.
I’m in good shape personally, but I would love to see more people in good shape. I think the economy would be on a firmer footing, which would be good for everyone.

I read an interesting column, predicting that if the Democrats take over Congress they will pass bills like a reasonable minimum wage hike, allowing the government to negotiate for better drug prices, for funding stem cell research etc. All stuff Republicans hate and the people love. The Republicans will either have to support this stuff or give ammunition for the Dems for the 2008 campaign. It will be fun, and even better for the country than investigations.

[Voyager]

[QUOTE=Blaster Master]
Oh, I forgot to respond to this. A lower unemployment rate isn’t always a good thing. At some point, it starts to become a work shortage, which can be bad nearly as bad as too many unemployed (inflated wages, high turn around, underqualified employees, etc.). Now, IANA Economist but, IIRC that crossover point from worker surplus to worker shortage is somewhere around the 4-5% area. I’m sure someone more knowledgable on the subject can correct that undoubtedly incorrect number.
[/QUOTE]

If the unemployment rate were really that low, we’d expect to see upward pressure on wages, which is just not happening. So I have my doubts. I’m not saying anyone is cooking the books - just that there may be a lot of people who have given up.

[Blaster_Master]

[QUOTE=Voyager]
If the unemployment rate were really that low, we’d expect to see upward pressure on wages, which is just not happening. So I have my doubts. I’m not saying anyone is cooking the books - just that there may be a lot of people who have given up.
[/QUOTE]

The number is naturally going to be inaccurate. For instance, it could be skewed upward by someone who may be out of work, but not particularly interested in getting back into the work force (eg, a guy gets laid off/quits decides to go back to school, one from a working couple quits to be a stay-at-home parent, someone retires early, etc.). This number could be skewed downward by someone who is underemployed.

I’m in the technology field, and personally, I’ve noticed a general decline in the quality of the people that have been hired and an increase in what they’re willing to put up with to keep someone around. I’ve also seen wages baloon to hire/keep people that don’t really deserve those wages. Is this just our company failing at properly weeding out candidates? Is this a result of fewer available skilled workers? I don’t know. Still, I have no way of observing unskilled laborers, retail, etc.

[Age_Quod_Agis]

[QUOTE=Blaster Master]
Link to the column?
[/quote]
I believe this is the article Plan B is talking about.

I’m not convinced the of relevance of the numbers you provided. Are those recent numbers, or numbers from about the time Kerry said that?

Recent numbers.

Why are all the numbers only compared to the 80’s and 90’s and not to the great depression?

Because the 80s and 90s were decades of economic prosperity. The Great Depression was not. It wouldn’t be too convincing to say that today’s economy is doing great, and then compare it to the Great Depression.

Is this article even related to Kerry’s statement?

Only insofar as Kerry suggested that the economy was cold, and running colder. Here’s the relevant quote from Will’s column:

“Worst economy since Herbert Hoover,” John Kerry said in 2004, while that year’s growth (3.9 percent) was adding to America’s gross domestic product the equivalent of the GDP of Taiwan (the 19th-largest economy). Nancy Pelosi vows that if Democrats capture Congress they will “jump-start our economy.” A "jump-start " is administered to a stalled vehicle. But since the Bush tax cuts went into effect in 2003, the economy’s growth rate (3.5 percent) has been better than the average for the 1980s (3.1) and 1990s (3.3). Today’s unemployment rate (4.6 percent) is lower than the average for the 1990s (5.8) – lower, in fact, than the average for the past 40 years (6.0). Some stall.

@Blaster Master

Yes, comparing the modern economy to the great depression is ludicrous. I do tend to believe that tax cuts help to stimulate the economy, but I’m not going to give the credit to any one or party in particular. I’m humble enough to realize there’s plenty of other factors at work besides, and the tax cut is probably one of the lesser ones.

I’m with you. I think the economy is in great shape, but I don’t think it’s necessarily because of anything Bush has done. The economy is a rather large beast that runs where it wants. It goes through cycles regardless of what the President does. The President has less of an effect on the economy than he’s typically given credit (or blame) for.

A lower unemployment rate isn’t always a good thing. At some point, it starts to become a work shortage, which can be bad nearly as bad as too many unemployed (inflated wages, high turn around, underqualified employees, etc.).

I’m not an economist either, but a work shortage is much different than a glut of unemployed workers. For one, a work shortage just slows the growth of the economy. A work surplus creates unemployment, poverty, and associated ills. I think most everyone would agree that if given the choice, a work shortage is better.

[Blaster_Master]

[QUOTE=Voyager]
I’m really sick and tired of the Republicans spouting this stuff to try to counter the fact that most people in the country don’t think the economy is so hot…
[/QUOTE]

I’m really sick and tired of the Democrats blaming the Republicans for the supposed poor state of the economy. Don’t get me wrong, I’m not a Republican… I’m just as pissed when I see Republicans blame Democrats for stuff too, but can you provide a cite that decidedly says the economy ain’t “so hot”? Just because a lot of people in this country think it’s bad, doesn’t mean it is (ie, argumentum ad populum).

Further, I’m not convinced increasing the minimum wage will do any good. Its my understanding that a higher minimum wage has little to no effect on the poorest’s buying power, while thrusting more people into the group of people making minimum wages, while increasing production costs for any company that employs minimum wage laborers, thus passing the cost on to the consumer which essentially cancels out what little extra buying power it granted the poor while having, in effect, created more of them. Regardless, I do not want to hijack the thread and turn it into a minimum wage debate. I’ll open a seperate thread if you want to discuss it further.

Can you give us a link to this article about how the Democrats will fix everything when they take over congress? What makes these predictions credible? I’m not inclined to believe these sorts of outlandish predictions, because I’ve seen them everytime the house or the senate or the presidency, or some combination of the above change hands (to Democrats OR Republicans), and it just seems like they either fix nothing, or its a whole new mess of problems.

[Blaster_Master]

[QUOTE=Age Quod Agis]
I’m not an economist either, but a work shortage is much different than a glut of unemployed workers. For one, a work shortage just slows the growth of the economy. A work surplus creates unemployment, poverty, and associated ills. I think most everyone would agree that if given the choice, a work shortage is better.
[/QUOTE]

Thanks for the link, I just wanted to put the quote in context. FWIW, I do agree a worker shortage is preferable to a worker surplus… I just wanted to put in perspective that having an unemployment rate of 0% is not necessary as desirable as intuition would imply. I was, more or less, hoping I’d spin up an economist to either add to that, or correct me.

[Age_Quod_Agis]

[QUOTE=Voyager]
“Worst since Hoover” is clearly hyperbole, since the Depression didn’t end in early 1933.
[/quote]
I think George Will’s point is that “Worst since Hoover” isn’t hyperbole so much as it’s inaccurate. The economy was (and is) not bad at all. So saying it’s the “Worst since Hoover” isn’t just hyperbole, it’s false.

Unemployment may or may not actually be lower - we don’t know how many are out of the job market. Plus there is a lot of underemployment, as people who have been laid off have only found lower paying jobs.

Both true. However, both are also true in all economies. I’ve seen no evidence to indicate that they are more prevalent in this one.

However, wages have gone nowhere for the past six years, while productivity has improved and profits have dramatically improved.

Will addresses this, too. Here’s what he says.

@George Will

It is said that employee compensation has been stagnant. But to tickle that bad news from the statistics you must treat “compensation” as a synonym for wages and then ignore the effect of taxation on individuals’ well-being.

Kevin Hassett and Aparna Mathur of the American Enterprise Institute, writing in National Review, say annual wage growth since 2000 has been 0.6 percent, but the annual increase in real hourly compensation, including benefits – and if you do not include them, why are they called benefits ? – has been 1.3 percent. And taxes – particularly those paid by middle-class families with children – have declined substantially.

@Voyager

If you are well off, if you make money from dividends or from the market, if you have a rare skill that is in demand, then you’re in good shape. If you work for a living, not so much.

I must admit I’m surprised by your statement that people who make dividends or have rare skills don’t “work for a living.”

Regardless, Will address this, too:

@George Will

Finally, today’s widening income disparities will be partly self-correcting. Granted, income statistics show the increasing disadvantages of persons with education deficits. But that is the market saying – shouting, really – “Stay in school!” Over time the voice of the market is rational, credible and therefore a potent instrument for changing behavior.

@Voyager

I read an interesting column, predicting that if the Democrats take over Congress they will pass bills like a reasonable minimum wage hike, allowing the government to negotiate for better drug prices, for funding stem cell research etc. All stuff Republicans hate and the people love.

Bush funds stem cell research, and has apparently done so since 2001.

@George W. Bush (emphasis added)

As a result of private research, more than 60 genetically diverse stem cell lines already exist. They were created from embryos that have already been destroyed, and they have the ability to regenerate themselves indefinitely, creating ongoing opportunities for research. I have concluded that we should allow federal funds to be used for research on these existing stem cell lines, where the life and death decision has already been made.
…
I also believe that great scientific progress can be made through aggressive federal funding of research on umbilical cord placenta, adult and animal stem cells which do not involve the same moral dilemma. This year, your government will spend $250 million on this important research.

And the government does negotiate for better drug prices in some areas. As stated by the NY Times (reg. req’d):

In asserting that Medicare officials should be able to negotiate with drug companies, the medical association said that other federal agencies, like the Department of Veterans Affairs and the Defense Department, had "negotiated favorable rates on prescription drugs on behalf of their beneficiaries, resulting in very substantial cost savings.‘’

Moreover, it said, "others delivering medical services under federal health care programs, including physicians, have long been under government-imposed limits on their fees.‘’

Regardless, you’re talking about the new Medicare bill. But the new Medicare bill didn’t prevent negotiations on drug prices. The new Medicare bill was implemented by private insurers. The private insurers were responsible for negotiating their own prices with the drug companies. The government was merely prohibited from “interfering” in those negotiations either for the drug companies or insurers.

[Age_Quod_Agis]

[QUOTE=Blaster Master]
I was, more or less, hoping I’d spin up an economist to either add to that, or correct me.
[/QUOTE]
D’oh! Sorry. Hopefully I haven’t prevented someone more knowledgable from coming in to correct my uneducated arse.

[BrainGlutton]

[QUOTE=Age Quod Agis]
I must admit I’m surprised by your statement that people who make dividends or have rare skills don’t “work for a living.”
[/QUOTE]

That certainly is the case WRT a dividend-drawer or rentier. (Some of those do work, but there is no connection between their work and their dividends.)

[DanBlather]

Saying that something is the “worst since X” isn’t comparing it to X, it’s comparing it to everything since X. In fact, it clearly means that it is not as bad as X.

[Cheesesteak]

[QUOTE=DanBlather]
Saying that something is the “worst since X” isn’t comparing it to X, it’s comparing it to everything since X. In fact, it clearly means that it is not as bad as X.
[/QUOTE]
I think the common usage of the phrase intends to compare the current event to X. As in, the current event is almost as bad as X. You can pick it apart grammatically to “prove” it’s not equating the two, but it’s no accident that so many native English speakers believe it does.

Anyway, did Kerry really believe the economy in 2004 was worse than the economy in late 70’s?

[DanBlather]

[QUOTE=Cheesesteak]
I think the common usage of the phrase intends to compare the current event to X. As in, the current event is almost as bad as X. You can pick it apart grammatically to “prove” it’s not equating the two, but it’s no accident that so many native English speakers believe it does.

Anyway, did Kerry really believe the economy in 2004 was worse than the economy in late 70’s?
[/QUOTE]
I think Kerry is wrong BTW, but I can’t see pitting someone as comparing the economy to the Depression when he did no such thing. I have no reason to believe that is what most native English speakers believe, and it is hardly nit picking.

“The Bears lost 24-0 today, their worst lost since 1985” That is saying that in the last 21 years the Bears have not lost by 24 points or more. The loss in '85 could have been by 50 points.

[Cheesesteak]

[QUOTE=DanBlather]
I think Kerry is wrong BTW, but I can’t see pitting someone as comparing the economy to the Depression when he did no such thing. I have no reason to believe that is what most native English speakers believe, and it is hardly nit picking.
[/QUOTE]
First off, it’s a debate, not a pitting.

Second, Blaster Master, Voyager and AQA all mentioned the Great Depression in their responses to the OP. If today’s economy was obviously not being compared to the Great Depression in any way, then none of them would have felt compelled to mention the Depression. That is proof that some English speakers would interpret it as a comparison.

Third, as was mentioned, the Depression didn’t end when Hoover left office, it was in full swing for years after that point, so a comparison to the Depression is entirely consistent with the most literal possible meaning of his quote. If he didn’t mean to compare it with the Depression, he should have taken a history lesson and picked a date after the Depression ended as his comparison point.

[Voyager]

[QUOTE=Age Quod Agis]
I think George Will’s point is that “Worst since Hoover” isn’t hyperbole so much as it’s inaccurate. The economy was (and is) not bad at all. So saying it’s the “Worst since Hoover” isn’t just hyperbole, it’s false.Both true. However, both are also true in all economies. I’ve seen no evidence to indicate that they are more prevalent in this one.Will addresses this, too. Here’s what he says.

[/quote]

The only problem is that the increase in benefits is not keeping up with the increase in health care costs. More of the share is going to the employee, and more are being dropped. So the increase is not keeping up with inflation in this sector.

I must admit I’m surprised by your statement that people who make dividends or have rare skills don’t “work for a living.”

I’m in the rare skills class myself. I wondered about writing that, and, while I put in a lot more than 40 hours a week, I’ll take my job over that of one in the masses anyday. So, I’m insulting myself.

Regardless, Will address this, too:
Bush funds stem cell research, and has apparently done so since 2001.

The stem cells lines are becoming increasingly useless, and he did veto the measure funding research for which there is some hope. There weren’t nearly as many valid lines as he said in any case. Most of the US has stopped falling for this crap.

And the government does negotiate for better drug prices in some areas. As stated by the NY Times (reg. req’d):Regardless, you’re talking about the new Medicare bill. But the new Medicare bill didn’t prevent negotiations on drug prices. The new Medicare bill was implemented by private insurers. The private insurers were responsible for negotiating their own prices with the drug companies. The government was merely prohibited from “interfering” in those negotiations either for the drug companies or insurers.

I believe the VA does negotiate, and quite well too. However, don’t you think it is more efficient if the whole government, which is funding this initiative, did the negotiating instead of a lot of insurers? The bigger you are the better deal you get - assuming you want a good deal for the people, of course.

[Voyager]

[QUOTE=Blaster Master]
I’m really sick and tired of the Democrats blaming the Republicans for the supposed poor state of the economy. Don’t get me wrong, I’m not a Republican… I’m just as pissed when I see Republicans blame Democrats for stuff too, but can you provide a cite that decidedly says the economy ain’t “so hot”? Just because a lot of people in this country think it’s bad, doesn’t mean it is (ie, argumentum ad populum).

[/quote]

Well, if Republicans pass tax cuts to make the economy great, and campaign on what they did for the economy, they can’t turn around if the polls show the economy isn’t hot (in the opinion of the people) and say they had nothing to do with it. And vice versa, of course - this is not a Republican only sin.
My point is not that the economy is absolutely good or bad, but that how it is depends on where you sit. If the majority of voters feel they haven’t gotten any benefit from the great economy, the response is not to tell them how great Mr. Rich Man is doing, and then wonder why the response doesn’t make them happy. The economy is great from a certain perspective, and stinks from another. They’re running into the problem that dollars do not always equal votes.

Further, I’m not convinced increasing the minimum wage will do any good. Its my understanding that a higher minimum wage has little to no effect on the poorest’s buying power, while thrusting more people into the group of people making minimum wages, while increasing production costs for any company that employs minimum wage laborers, thus passing the cost on to the consumer which essentially cancels out what little extra buying power it granted the poor while having, in effect, created more of them. Regardless, I do not want to hijack the thread and turn it into a minimum wage debate. I’ll open a seperate thread if you want to discuss it further.

That would only be true if prices were directly proportional to wages - and to the minimum wage in particular. If prices did not go up as fast as the minimum wage, then they would do better.

Can you give us a link to this article about how the Democrats will fix everything when they take over congress? What makes these predictions credible? I’m not inclined to believe these sorts of outlandish predictions, because I’ve seen them everytime the house or the senate or the presidency, or some combination of the above change hands (to Democrats OR Republicans), and it just seems like they either fix nothing, or its a whole new mess of problems.

I’ll look it up, but you misunderstand the article. It wasn’t about fixing anything - it was all about the political ploy of passing popular legislation to embarass Republican congresspeople and the Administration. It’s pure politics, not a recipe for curing our ills - even if some of it will help, imo.

[jshore]

[QUOTE=Plan B]

"Since the Bush tax cuts went into effect in 2003, the economic growth rate (3.5 percent) has been better than the average for the 1980s (3.1) and '90s (3.3).
[/quote]

It is a little strange to compare an average growth rate over ten year periods to the growth rate over a period cherry-picked because the economy has done well over that particular interval of time. At the very least, one should compare the growth rate of those decades to the not-yet-complete 2000 decade. After all, if I cherry-pick the best 3 year period from the decades of the 1980s or 1990s, I am betting I get a considerably higher number than 3.5%.

At any rate, a big difference is that during the 1990s, we not only had good economic growth but we used this growth to start to get out of debt. By contrast, the time since Bush took over has been a time as trying to generate economic growth by maxing out our national credit card. I don’t think that anyone disputes that deficit spending has a stimulative effect on the economy (at least as long as fed policies and the like keep interest rates low).

Another big difference is that the economic gains of the 1990s were much more evenly distributed, with the poor and middle class gaining considerable ground too. By contrast, the vast majority of gains since 2000 have gone to a very small minority of wealthiest Americans.

And that’s after the 9/11 trillion dollar hit and the recession which started with the internet bubble bursting in 2000.

I’m skeptical of this “trillion dollar hit” claim. Sure, I imagine that 9/11 and what followed had some negative impacts on GDP…but I imagine it had positive effects too. Remember that GDP is an imperfect measure and, as such, things like disasters and wars can inflate it as money gets spent rebuilding or manufacturing weapons and so forth.

[gonzomax]

Personal bankruptsies went up 30% in the last 2 years. 2.1 million Americans filed last year. Forclosures are up 25% in the last year. 50 million people are without health insurance. If you are doing well ,you are doing very well. If not it is getting ugly fast.The middleclass that have lost their jobs due to them moving abroad have to completely restart. It is not always easy or possible. if you are too old to learn a new way to make money you are screwed. In many large cities ,unemployment is horrible and they have given up looking.