Don't get too excited about some recent brighter economic news | Hacker News Reader

Don't get too excited about some recent brighter economic news

economist.com

33 pointspg16 comments

Remarkable facts about The Economist:

- It is a British newspaper published in London, although only 13% of its copies are sold in the United Kingdom. 57% are sold in North America, 17% in Continental Europe, and 10% in Asia.

- It doesn't actually focus on the economy that much. Most content is political.

- It is liberal in the classical sense. That is, it favors both personal and economical freedom.

- Articles don't mention the name of the author.

is there anyone who does not favour personal and economic freedom in a democracy?

Well (in a very rough sense) the Democrats campaign for personal freedoms and seek to control economic ones more (pro-choice yet more regulation). Likewise, the Republicans want economic freedoms and seek to control personal ones (low taxes, deregulation, yet ban abortion and gay marriage).

Obviously, any time you generalize a party into two vectors like this, it's not exact, and I'm sure there are numerous cases of policies from both parties that don't fit this nice little mold, but I think that is what the OP was trying to point out. The Economist's definition of 'liberal' does not mean 'democrat' as it does in most of America today. They espouse 'classical liberalism', which is more libertarian in nature, but not taken to the extreme. (They, for instance, support the idea of central banks and fiat money, and a carbon tax or cap and trade scheme.)

I'm not really old enough to remember, but my understanding is that the Republican party used to be more aligned to these views before they embraced the religious right to win elections.

There may not be many people who are explicitly or publicly opposed to freedom, but consider certain elements of our system:

government bailouts, payroll taxes, immigration law, sales taxes, teachers unions, Social Security, eminent domain, death taxes, stadium deals, cab medallions, government pensions, whatever it is that the NSA does, Medicare, Amtrak, income taxes, city planning commissions, stock price lawsuits, mandatory government fees, property taxes, random police searches, wealth taxes, rent control, energy taxes, airport security, what the CIA does to people, mileage taxes, corrupt politicians with dirty money in the freezer keeping their jobs, sin taxes, wiretapping backbones, tax credits, alternative minimum tax, airport landing slots

My point is that there is a revealed preference at work here

In the US, just Republicans and Democrats.

It takes a long time to really explain, "favors both personal and economical freedom" than many people realize. But I don't think it matters for the purposes of that comment. We could go into an infinite regress of definitions.

But the debate reminds me of this post: http://lesswrong.com/lw/jb/applause_lights/

It might be worth a note that the second derivative of a few select markets are improving. I wish I wrote down the other links.

http://www.fivethirtyeight.com/2009/05/horray-second-derivat...

This example highlights the difficulty of extrapolating from a single month or quarter of data

yet the comparison of the data that this article makes is that of this period with a historical period.

I think the author misses the context, the fact that we have been and perhaps still are in a recession. To compare the now with the booming years of say 2005 we all know that there has been a decrees.

Being in a recession, the comparison with say last year or last quarter makes total sense, not to be used as optimism but realistically to see the trend.

The FT says we have bottomed out, I only wonder if we have learned the lessons, or whether this cycle of boom and doom will continue as always.

Articles and reports like these should not be made. This because it actually hurts the economy by discouraging the public. I'm sure many people spent at least a teeny bit more the last few days because of these signs of hope (which most likely led to more factory production, etc.) and now the media comes and shatters them. Not good.

I highly disagree. To argue that articles like this have a macro effect on the economy (short term) is categorically false. If we want to focus on economic recovery as a function of consumer spending then we really can't zero in on a strong correlation between magazine articles and how the public feels about the economy without the data to back that up.

Furthermore, it is absolutely essential that everyone learns more about the current recession and are realistic about a recovery.

http://baselinescenario.com/2009/05/25/recession-and-recover...

I would in fact argue that economic education for the public helps the economy, because if more people are educated on the many factors that contributed to the current recession (negative U.S. savings rate being one major one) then they now have the knowledge to change their actions. On a wide scale (larger percentage of people saving more) this would have a net positive effect on the economy.

I don't believe it will have a macro effect on the economy, but these small "glimmers of hope", as Obama calls them, need to be worked upon. The truth of the matter is that if we focus on the economy, and not in the people, it would be better if people spent more.

That's the whole point of tax reductions: giving more money to the tax payer in order to increase spending. That's what has been done for years. Remember a while back, when the government gave around $700 USD (?) to Americans so they could go out and spend that money.

Agree. It's almost impossible to determine the correlation, if it exists at all.

On your later point, ironically if everyone now decided to save more, this would not have a positive effect on the economy.

I think saving right now is one of the smartest financial moves families can make. One reason being that if people have a stronger asset base then you not only have the ability to transfer value over periods of time, but you are in more sound financial condition when you buy a house. Think about the scale of the sub prime mortgage market, then think about how things would have turned out during the housing boom (2005, 2006, early 2007) if even 30% of those subprime borrowers had more savings to their names (the vast majority had none). While the financial crisis would have still occurred, maybe banks wouldn't have been hit as hard because a larger percentage of people saving could possibly translate into less people defaulting on their mortgages.

The second reason is the resulting taxpayer bailout of the financial institutions. The increase in taxes from all of these recent programs aimed at removing toxic assets from banks balance sheets, increasing liquidity in the credit markets, etc. haven't even hit taxpayers yet. Saving now enables people to react better financially when taxes rise later down the road. I don't think increased consumer spending (on credit) is as reliable a metric of the overall health of the economy as it was, because while the U.S. is a credit driven economy, using lots of credit and having any or little savings are one of those things that led us to where we are now.

I also believe saving is what families should do, but capitalist economies are based on spending. If everyone saves everything, and spends nothing - or next to nothing - on non-essential commodities, companies will suffer. And we don't need more bankrupt businesses.

Your stance is very short sighted. If public commentators and economists stop openly speaking their mind, the public will eventually find out and cut back on spending simply for fear of more unexpected shoes to drop. Distrust in everything that is being published is a dead sure way to destroy confidence in the economy and in the political system as a whole.

> Articles and reports like these should not be made.

What was the author's opinion of such articles in 2007 and early 2008?

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