The Busted Economy as a House Afire

**Update 9/6: Here are a couple charts as visual aids. Approach them cautiously if you’re prone to vertigo.**

Over the weekend at CEPR blog, Dean Baker addresses the question, “Are the American people better off than they were four years ago?”

The reason we know that the questioners are incompetent reporters is that this is a pointless question. Suppose your house is on fire and the firefighters race to the scene. They set up their hoses and start spraying water on the blaze as quickly as possible. After the fire is put out, the courageous news reporter on the scene asks the chief firefighter, “is the house in better shape than when you got here?”

A serious reporter asks the fire chief if he had brought a large enough crew, if they had enough hoses, if the water pressure was sufficient. That might require some minimal knowledge of how to put out fires.

Similarly, serious reporters would ask whether the stimulus was large enough, was it well-designed, and were there other measures that could have been taken like promoting shorter workweeks, as Germany has done. That would of course require some knowledge of economics, but it sure makes more sense than asking if a house is better off after it was nearly burnt to the ground.

We could add that prioritizing serious deficit-cutting over job creation at this point is like trying to put on a new roof while the embers are still smoldering and threatening to re-catch.

At any rate I’m glad to see macro-economists talking matter-of-factly about depression economics and encouraging a higher level of dialogue on the subject.

I’d like to see more of the voting public get a handle on basic macro, too, for the same reason I consider it important that Illinois residents have an understanding of Home Rule and TIF: we need the ability to sort the snake oil from the genuine balm when it comes to evaluating policies and programs that could help or harm our futures.