President Bush went up to New Hampshire recently and said the economy is in a ”free fall,” a statement conjuring up the image of imminent collapse of the entire country.
Rep. Dan Rostenkowski (D-Ill.), chairman of the House Ways and Means Committee, declared on national television that the nation is in a depression, triggering frightening memories of desperate people in 1930s-style bread lines.
An unsigned letter just came in the mail agreeing with Rostenkowski`s statement.
”Many, many people who lost their jobs in the 1982 (recession) never did get as good a job when they did get back to work,” the author wrote. ”If you worked at a steel mill then making $13 an hour, and now you are a security guard at $6.50 an hour, you are in a depression.”
Jimmy Carter`s malaise is back, in exaggerated form.
The nation has literally talked itself to an economic precipice, and some people, including the president, have talked us right over the edge. Hyperbole rushes into every microphone and roars from every television set. That may have always been true, but this time we are prepared to believe it.
The aura of defeatism is overpowering. General Motors Corp. and IBM added to the mood when they all but admitted they were on the wrong course and decided to scale back and think smaller. The unemployment lines are brimming over with college graduates. States, counties and cities are being forced to cut back services. Our roads and streets are falling apart.
Just listen to the excessive rhetoric of despair: We cannot make a good car or, for that matter, manufacture anything worthwile anymore. Our kids emerge from our school system virtually, if not actually, illiterate, incapable of functioning in a modern technological society.
The country takes seriously the ramblings of a Japanese politician, Yoshio Sakurauchi, speaker of Japan`s House of Representatives, who called America`s workers lazy and overpaid. He went on to say that a third of the work force can`t read or write. The U.S., he said, is ”Japan`s
subcontractor” and is on its way to losing respect in the world economy.
This speech will make many people angry because it comes from an ally that seems to be gloating because the U.S. is in economic trouble. But such words wouldn`t surprise us at all if they came from the mouth of a well-recognized U.S. leader. Some of them have previously expressed the same kinds of views.
America, it seems, is prepared to believe the worst about itself and the direction of its economy.
To stand against this powerful tide of pessimism and assert that it`s being superbly overdone might be an act of futility. But here`s a try: We are not in a free fall, nor are we in a depression-at least not yet, unless we talk ourselves into one.
Robert Dederick, vice president and economist at Chicago`s Northern Trust Co., said things would have to get much worse to qualify as a depression, including an unemployment rate of more than 10 percent for a prolonged period. (It got worse than that in the 1930s.) It is now 7.1 percent nationally, although higher in Illinois and some other states.
The economy is scraping along the bottom, probably declining slightly at the moment, but historically it`s still a moderate recession. ”People don`t know what a depression is,” Dederick said. ”They`re using the term very loosely. We have a whole group of young people who don`t even know what a serious recession is.”
This is not to deny that the economy is in trouble and many people are hurting, but surely times like these call for more accuracy and perspective in the way we view and talk about ourselves. We should abandon our reckless rantings and try to assess our economic state with less emotion and more precision. Only then will the solutions become clear.
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For three years in a row, the economy has been trapped in what Dederick calls a ”state of torpor,” unable to break out on a higher growth path and vulnerable to shocks such as the Persian Gulf war. This long, frustrating economic malaise has chipped away at our confidence and our natural sense of economic optimism.
The 1980s brought many economic excesses that will have to be paid for in the 1990s, but the country does not have to redeem itself by going through a repeat of the 1930s. There is nothing written in stone that a boom must be followed by a devastating bust. We need to refine our thinking and figure out how we can manage our current need for austerity without bringing the economy down.
It`s not fashionable to say it now, but America is capable of outproducing and outperforming the rest of the world economically, including the vaunted Japanese. But we`ll never get there if our own leaders throw more fuel on the burning fires of pessimism.
On the economy, the president has demonstrated that he has reckless lips. As a former Navy pilot, he should know that loose lips sink ships.