If you need to move the goalposts, shouldn't you reconsider why you are on the field?
Posted by aogSunday, 24 August 2008 at 21:27 TrackBack Ping URL

A couple of long time friends dropped by this weekend. They live in California but he was originally from around here and they were visiting family. At one point she asked us who were were going to vote for and I said “McCain” and SWIPIAW agreed that she’d probably end up doing that as well. I noted that I didn’t think much of McCain, but I wasn’t going to be voting for an empty suit with a collection of Socialist, Marxist, and unrepetentant terrorist friends who in the end, was just another political hack from the Chicago Machine. She countered with “look at how much damage Bush has done to this country!”. I disputed that and asked for examples. “Well, the economy — we’re in a recession …” — I called a halt and pointed that no, we’re not, a recession being two quarters of negative growth and it’s been a long time since we had even one negative quarter. She came back with how a “recession” was defined a bit differently now. In the standard morning after realization, I realized I should have pursued that and pointed out something that is a major peeve of mine, which is that if you have to make up stuff, or invent new definitions for standard terms, in order to point out the dismal record of someone, shouldn’t you first wonder why that’s necessary? If the person is so bad, why would you need to make up anything? I don’t have to make up anything to slam Bush, or McCain, for that matter.

Maybe that should be the diagnostic for Bush Derangement Syndrome. If your dislike for Bush is based on actual facts, OK. If it doesn’t even occur to you that making stuff up about Bush in order to slam him might be dubious, then you’re a victim.

Comments — Formatting by Textile
Harry Eagar Sunday, 24 August 2008 at 22:14

How long ago was March?

Otherwise, I agree with you about the goalposts.

Annoying Old Guy Monday, 25 August 2008 at 00:09

March was 6 months ago. But there was positive growth in the first and second quarters of this year, so when ever that last quarter of negative growth was, it was further back than March. Hmmm, a bit of searching and it seems to have been the 4th quarter of 2007, which is more recent than I thought. But at least I didn’t think it was March.

David Cohen Monday, 25 August 2008 at 07:27

It’s a little more complicated than that. There’s no new definition, but there are alternative definitions. The “new” definition your friend mentioned is the definition used by the National Bureau of Economic Research which, it’s name notwithstanding, is an entirely private, unofficial organization of economists headquartered in Cambridge, Ma. NBER is interested in dating to the month cycles of expanding and diminishing economic activity in the US economy. NBER has not said that we are in a recession; basically, they never do. They wait for revised numbers to come in and date the cycle retrospectively. Most recently, in 2003 they announced that there had been a brief recession that began in March 2001 had ended in November 2001.

According to NBER, “A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.” Since NBER does not focus solely on GDP, it is possible that it could announce a recession that did not consist of at least two consecutive quarters of GDP contraction. Although it’s website is a little unclear, I don’t think that it has ever done so. When it announced the beginning of the 2001 recession, reported GDP had fallen in the first three quarters of 2001. After it announced the November 2001 end of that recession, second quarter 2001 GDP was revised upwards so that now the 2001 recession consists of two nonconsecutive quarters of contraction. NBER didn’t change its dates.

So, the NBER definition is not new, but neither is it “official.” We’re all free to choose the definition we like best. The rule-of-thumb or traditional definition (two consecutive quarters of contraction) works pretty well and is actually contemporaneously useful.

As for President Bush’s economic performance, I remain skeptical that the President has much to do, one way or another, with the economic cycle. But if he does, and I can see the heuristic value of holding him responsible, then President Bush has done pretty well. Accepting that there was a 2001 recession (which only someone deep in the throws of BDS could blame on a President who took office two months earlier), then we’re in the 83rd month of the Bush expansion. The post-war average is 57 months. If we don’t recognize the 2001 recession, either because there weren’t two consecutive quarters of falling GDP or because it wasn’t a significant decline in economic activity spread throughout the economy, and as I said we’re not bound by NBER’s determination, then we’re at 203 months of expansion, by far the longest in American history.

Which brings us to the real answer to your friend: does she really think that all recessions can be avoided, that the economy can grow continuously without respite and that the President can achieve this? As a general proposition, saying of someone that she thinks that the business cycle has been repealed is not a compliment on her keen grasp of economics. All the sins of the federal government that we get excited about — earmarks, deficits, wasteful spending, etc. — are pretty small compared to the size of the economy. The amount of difference a President, or the government as a whole, could realistically make doesn’t amount to 2-3% of GDP. I believe in tipping points, but I don’t believe that a swing that small can avoid all recessions. It’s easier to believe that fixing those “problems,” if done through bad tax policy, could easily have a worse effect on the economy by dissuading producers from producing.

What really seems to happen is that companies start an expansion lean and hungry. But as the expansion gets older, living is easy and money is cheap. Inventories grow, payrolls grow and perks grow. Eventually, the dead weight gets to be too much and the economy tanks as companies either go under or shed inventory, employees and benefits as fast as they can. When they’re back to lean and hungry, the cycle starts over again. Computers and management education seem to have constrained companies from gaining too much fat during the good times, so we’re seeing longer expansions and shallower contractions. The President doesn’t have much to do with it one way or another.

Annoying Old Guy Monday, 25 August 2008 at 09:08

With regard to Presidents and economies, I take the gardening view. There’s little the person can do to make things grow better, but many things he can do to make it grow worse.

Bret Monday, 25 August 2008 at 11:02

Yes, much easier to destroy than to create.

Harry Eagar Monday, 25 August 2008 at 14:01

I’m too lazy to look it up, but as I recall the restatement of the 2Q put it in the red, though by only a tiny amount. Sort of like restating 1934 as the warmest year ever.

Just a distraction. Not a bad time to be in the awl bidness, but not so hot to be a retailer, newspaper, contractor, banker etc.

Annoying Old Guy Monday, 25 August 2008 at 14:18

I did look it up, and it’s the other way around. The original statement was in the red, but it was revised later to a 0.6% growth. Maybe a technicality, but like Phelphs’ win at the Olympics, there are rules and it’s disingenuous to change them after the fact, and especially so to do so without being clear that you have done so.

Ali Choudhury Tuesday, 26 August 2008 at 04:45

A valid point would have been the Bush admin’s stupid encouragement of subprime lending. Although it’s doubtful a Democrat in the White House would have acted differently.

Harry Eagar Tuesday, 26 August 2008 at 11:18

I don’t kmow that the administration encouraged it. It welcomed the buzz, but my interpretation is that the government view was, ‘the markets are working, what could possibly go wrong?’

There were plenty of people, high and low, including me, who saw what was coming. And there are still plenty of idiots in and near the administration who think the collapse was good, because that’s what the market dictated.

Certainly the Democrats would have welcomed the buzz. They might perhaps not have shared the ideological worship of market fluctuations.

I think guy’s metaphor is not apposite. Instead of goalposts, the question is, why send boys to play a man’s game? In this case, the Shikago Boyz.

cjm Thursday, 28 August 2008 at 08:42

people don’t want to be honest about their feelings. instead of just saying “i don’t know why but i really hate george bush” (or whomever is the subject of their hatred) your friends feel compelled to justify their feelngs. hence the nebulous claims of disaster. the one real disaster — katrina — always gets mentioned right up front (and that was really the responsibility of the state goovernment, all dems).

my rejection of bush is based on his being an absent leader; i.e. no leader at all.

Harry Eagar Friday, 29 August 2008 at 01:26

Friday’s Maui News should have my story on Paul Brewbaker, the nation’s funniest economist, on the subject of non-occurring recessions.

2Q GDP up 3.3%. Paul says that’s a funny recession. I agree. I do not have the time to deconstruct it, but suspect that when you correct for oil in barrels instead of dollars and subtract $160B in funny spending you get something much closer to 0.

Gronker Friday, 29 August 2008 at 02:59

I’m too lazy to look it up, but as I recall the restatement of the 2Q put it in the red, though by only a tiny amount.

Harry, are you ever right? For a “reporter”, you might be the worst researcher I have ever had the misfortune to read. Then again, you might just be par for the course.

suspect that when you correct for oil in barrels instead of dollars and subtract $160B in funny spending you get something much closer to 0

Funny how you take this position when it fits your bias. Your kind of relativistic bias is why you are so incapable of communicating a coherent thought into your posts.

If I were you, I would consider a career change. Someone with your qualifications would have no trouble finding a top-flight job in either the food service or housekeeping industries.

David Cohen Friday, 29 August 2008 at 12:07

Harry: Gross Domestic Product doesn’t include the value of imported oil because it’s not domestic product.

What $160 billion in funny spending?

Harry Eagar Friday, 29 August 2008 at 12:54

True, David, but it does include the 42% of oil that is domestic, and that’s a lot of oil. Unless adjusted for, that’s gonna pump up GDP by a huge amount although the actual economic effect would not change.

What, you never heard about $160B of stimulus checks that went out on the never-never?

What’s our motto today, spend yourself to prosperity?

Annoying Old Guy Friday, 29 August 2008 at 13:31

Why, Mr. Eagar, I thought that kind of “pump priming” was just the sort of government intervention you liked, rather than letting the cold hands of The Market work it out.

Harry Eagar Friday, 29 August 2008 at 23:37

Nope. I like government spending for specified purposes, like, for example, TVA. Spending for the sake of spending, particularly when you are borrowing the money, is just dumb.

I recall, though, that your hero Ronnie Reagan did it to the tune of $50 billion to fix potholes. Now there was a grave national crisis that required intervention, wasn’t it?

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