Does Being Gloomy Make You an Incompetent Prognosticator?
David Stockman and the cult of gloom … We think of spring as a time of cherry blossoms and renewed hope, as we slough off the depths of winter and ease into the warmer months. These bright days seem a strange time to encounter the by-now widely circulated warnings of impending doom by Ronald Reagan's budget director, and current gadfly, David Stockman. In a long essay in the New York Times drawn from his lengthy and just-published book The Great Deformation, Stockman this week made an impassioned plea for Americans to wake up to the looming crisis just ahead. This crisis, he predicts, will be triggered by a stock market collapse that will remove any lingering illusion that we are OK: "When it bursts, there will be no new round of bailouts like the ones the banks got in 2008. Instead, America will descend into an era of zero-sum austerity and virulent political conflict, extinguishing even today's feeble remnants of economic growth." – Reuters
Domininant Social Theme: People who are gloomy about the future are ruining their own lives and also ours. The world is what it is and could not be any better any sooner.
Free-Market Analysis: The book excerpt by David Stockman that appeared recently in the New York Times (entitled "The Great Deformation") has badly rocked the chattering classes (see other article this issue). Their arguments are being deployed now in a concerted counterattack that seeks to portray Stockman as a depressing scold.
We have heard this argument before. Life is short and gloom only gets in the way of legitimate enjoyment. But surely there is not much more enjoyment in this life then positioning oneself on the right side of arguments over the most important issues of our day.
This Stockman has done. He has read the literature (presumably on the Internet) and come to conclusions about the Way the World Works. He has encapsulated those conclusions in a book and because he belongs to a variant of the chattering classes himself (being a former political operative) it is virtually a necessity that he be opposed.
And yet there is not much that can be said against Stockman's arguments. He is not in favor of central banking or government programs that interfere in the marketplace. He believes such facilities are ineffective and destructive. Given the wreckage strewn around us, how can anyone disagree?
Well, Reuters can, along with the usual suspects – the Washington Post and a myriad of leftist blogs, etc. This Reuters article is a good one to analyze, as it is almost a textbook meme of economic-gloom-as-an-unhealthy-obsession. Here's more:
Stockman has many proposed solutions abolish Medicare, means-test Social Security but little hope of any change. The system is broken, the die is cast, sell, sell, sell, sit with cash in your mattress and hope we can make it through the reckoning. Usually, such crib notes of an argument do it injustice. But the above is not a caricature of what Stockman predicts. It's what he believes to be the imminent fate of America.
He is an unusually erudite and eloquent voice, but his message is so stark that it's almost impossible to violate by reducing it to its bare minimum. It's remarkable how much play these views get and how much traction they have. The tradition of jeremiads extends back to the dawn of recorded history; the biblical The prophet Jeremiah railed against the flaws and failings of the Israelites, and though he was ridiculed for delivering an unheeded message, in the fullness of time his words came back to haunt his people. American society is infused with that tradition.
Just read the sermons of any number of 17 th century New England pastors who decried the immorality and sloth of their congregations, or various Great Awakenings that called people to return to the right way or risk God's wrath and misery. Today's jeremiads are decidedly more secular – though you can still hear religious ones in churches and temples scattered through the land. But the ones that grab the public's imagination are now economic rather than religious, warning of collapse unless we all wake from our stupor of greed and debt-infused denial. Stockman is the voice du jour, but he joins a chorus.
Hmm … If Stockman joins a chorus it is only because so many see that the 20th system of fiat-money mercantilism is now in the process of dying a lingering death. Its foundation is price fixing on a massive – global – scale via monopoly central banking and its impoverishing results are causing wave after wave of resentment and repugnance.
Yes, if Stockman is gloomy, surely he has a right to be. He is a member of a Baby Boom generation that believed the nostrums they were peddled about politics, public solutions to private problems and, of course, the validity of fiat money and investing as a guarantee of increasing wealth.
But for many scraping by in the 21st century there is little wealth to be had these days. Their fortunes and, more importantly, their certainties have collapsed. And if Stockman is to be combated, it ought to be on the merits of his ideas and opposing ones. What's fascinating is that those seeking to rebut Stockman's arguments literally have nothing substantive to offer.
Calling Stockman gloomy or moralistic does not provide a coherent counterattack. Having marshaled both these arguments, the Reuters article descends further into the muck of confused rhetoric and temporizations. The column's conclusion includes the following:
None of us know what will unfold, and the human legacy of accurately gauging what will happen is poor at best. Of course, Stockman might be right, and the jeremiads can be useful if they force us to focus on issues we are otherwise ignoring. Surely, political and economic policy can use constant improvement. But as for the odds of him being right, the past is suggestive if not predictive: The end of the world, the collapse of an old regime, the implosion of order those are rare, rare, rare.
Just wait.
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