“Time for Democrats to panic over economy?” asks CNBC today — which these days seems to have metastasized into the equivalent of pro-Obama MSNBC but with a slightly less punitive tone and minus the overt racism:
It has not been a pleasant week for Democrats who hope that a strengthening economy will help them overcome other big electoral weaknesses and limit their losses in the 2014 midterm elections.
The biggest blow came Thursday with release of revised gross domestic product numbers showing the economy actually contracted 1 percent in the first quarter, the first decline since 2011.
Economists and the White House quickly (and correctly) downplayed the significance of the report given the impact of the brutal winter and the contribution from slowing inventory growth, which is likely to reverse in the second quarter.
You mean the brutal winter caused by brutal global warming, right? And now that it’s almost June, “Roll Out Another Recovery Summer!”, Glenn Reynolds quips, adding that “It’s almost as if drastic increases in taxes and regulation are holding the economy down or something. Nah, that’s crazy-talk!”
Back in 2004, Thomas Sowell quoted Eric Hoffer and said, “Intellectuals cannot operate at room temperature.” As Sowell told the American Enterprise Institute:
There always has to be a crisis–some terrible reason why their superior wisdom and virtue must be imposed on the unthinking masses. It doesn’t matter what the crisis is. A hundred years ago it was eugenics. At the time of the first Earth Day a generation ago, the big scare was global cooling, a big ice age. They go from one to the other. It meets their psychological needs and gives them a reason for exercising their power.
Sowell’s observation would be illustrated perfectly four years later by then-Obama sidekick Rahm Emanuel in his infamous comment to the Wall Street Journal in November of 2008 that “You never want a serious crisis to go to waste” — even if it means generating a crisis or two to keep the pressure on the American people. Thus we’ve seen Obama attempt to nationalize the auto and healthcare industries, destroy the coal industry, hike taxes, massively over-regulate the rest of the economy, and run up leviathan debts.
As elements of the Obama worldview collide with each other — growing the economy versus controlling it, versus fighting the imaginary and omnipresent global warming boogieman — the American economy grinds to a halt under all of the regulatory uncertainty their unending crisis mentality brings. As Amity Shlaes, the author of the remarkably prescient 2007 book The Forgotten Man summarized in a 2011 Bloomberg News column, one of the reasons why America had a “Great” — read: interminably long lasting — Depression was an enormous sense of uncertainty in the minds of business owners as to what deleterious laws were going to come next from the entrenched and capricious Roosevelt administration:
The second under-discussed issue is what scholar Robert Higgs has called “regime uncertainty.” Roosevelt’s victory in 1936 had been so convincing that people believed he might do anything. FDR reinforced this suspicion with an inaugural address so aggressive that modern presidential advisers would never allow it on the teleprompter. Roosevelt told the nation he sought in government “an instrument of unimagined power.” That scared markets and small businesses.
Roosevelt relished hunting down big firms through regulatory action and blaming new sectors, such as utilities, for slowdowns — on some days. Other days, he invited business leaders into the Oval Office and talked about partnership and a “breathing spell.”
This inconsistency itself posed a problem. The diary of an Ohio lawyer named Daniel Roth, which was recently republished, captures the pervasive anxiety of the period. “We are having a bad steel strike in Youngstown and the mills have closed,” Roth wrote on June 22, 1937. “The state and federal governments seem to support the labor unions and there has been a complete breakdown of law and order. Business is very quiet.”
From the U.K., John Maynard Keynes wrote to FDR that it was all right to nationalize utilities or to leave them alone — but what, Keynes asked, was “the object of chasing the utilities around the lot every other week?””
Shortly before he took office, Time magazine declared Mr. Obama the second coming of FDR. Curiously, they meant it as a compliment, not realizing it was a warning of similar economic disasters to come. If the Obama administration or its successor can take its hands off of the panic button, the American economy will then begin to recover. See also: economies of the 1950s and ’80s.
Incidentally, The Forgotten Man is now out in a “graphic novel” edition, a brilliant use of that format. Watch for my interview with Shlaes and her artist on that topic in the not too distant future.