Of Green Shoots and Broken Windows
by Rick Ackerman
Posted originally September 23, 2009
OUR MEMORY STUMBLES WHENEVER we try to recall any recent sightings of “green shoots” that would support the officially promoted illusion of a U.S. economy in recovery. Actually, this vision is more of a hallucination than an illusion, since one’s mind needs to venture beyond the pale of rationality, light years beyond the fringe of statistical evidence, to conjure up supposed signs of sustainable growth.
Does “recovery” square with the reality that you, personally, see all around you? Indeed, whatever picture the government and the news media want us to see will be unconvincing at best, since a hundred million Americans are each day living the anecdotal evidence that flatly contradicts what we are being told.
How many of the 50 million homeowners who are underwater on their mortgages, for instance, jumped for joy when it was reported yesterday that home prices in the U.S. rose 0.3% in August? Optimists would say it’s the trend that matters, but realists would point out that at that rate, it will take a decade for prices merely to return to where they were before the housing market collapsed.
Someone in the Rick’s Picks forum said the news media were in cahoots with the government to sell us on the idea that America’s worst downturn since the 1930s has ended. Speaking as a former newspaper reporter and editor myself, I have a more boring theory — that journalists are simply too lazy intellectually to pursue a story line that doesn’t perfectly fit the Administration’s script. With some cursory background reading in Econ 101, they could nail Greenspan and Bernanke to the wall for their lies and sometimes startling economic ignorance. But that would be a far more difficult story to write than the ones that flow so easily from the government’s press releases and speeches. Journalists’ other big problem is that 95% of them are hard-core liberals for whom Big Government, warts and all, will always be the answer.
Many of the reporters I’ve known have been very intelligent, but where economics is concerned, they seem incapable of understanding Frederic Bastiat’s so-called broken window fallacy. Bastiat’s parable, written in 1850, describes (from Wikipedia) “a shopkeeper whose window is broken by a little boy. Everyone sympathizes with the man whose window was broken, but pretty soon they start to suggest that the broken window makes work for the glazier, who will then buy bread, benefiting the baker, who will then buy shoes, benefiting the cobbler, etc. Finally, the onlookers conclude that the little boy was not guilty of vandalism; instead he was a public benefactor, creating economic benefits for everyone in town.”
And so it is for all those who continue to see Government as America’s economic benefactor, nay savior. Would someone please explain to such as the New York Times, the Wall Street Journal, and other zealous purveyors of green shoots where, exactly, the fallacy lies.