It’s worse than anyone cares to admit
Yesterday’s news was entirely consumed in the throes of yet another definition change. What everyone understood as being in a recession was suddenly changed by a government decree. It’s not a recession, they say.
All is well, they say, unless you are one of the cave-dwellers who desire abundant, low-cost energy, food, shelter, and human flourishing. Once you understood the beau monde on the other side of “transition” – to use the White House’s favorite word – you would see this suffering as truly beneficial in the long run.
These broken eggs make omelettes.
We can argue all day about the definition of recession, but that doesn’t get us to the intellectual place where we need to be. Ultimately, what we’re experiencing right now includes anomalies from previous downturns, precisely because it’s so much worse. Just a few months ago, many feared we were going back to the 1970s. That box was checked. Then we were afraid to go back to the 1930s. I’m afraid we wish that were true.
The White House talks about the low technical unemployment rate without referring to falling labor force participation rates that have never recovered from lockdowns because so many people have just left the workforce. Millions of Americans who used to work live off the largesse inherited from their families or collect copious unemployment benefits just to get by from month to month. Real wages and salaries have fallen, savings rates are plummeting, and credit card debt is skyrocketing.
It’s hard to put into a picture, but we can try, nowhere expressed more saliently than the change in real wages and savings, relative to savings as a percentage of personal income. The stable public data here dates back to 1960 and here we see how shocking those times really are. Personal savings are half of what they usually were from the 1960s through the 1990s, and even as recently as 2012. Real personal disposable income is falling dramatically.
You get a picture of a once thriving nation being bludgeoned by the plunder of public managers.
What is particularly striking is how the hard times were preceded just before by one of the most deceitful false leaders in history. Immediately after the shutdowns, the government flooded the frozen economy with trillions of dollars, injected directly into bank accounts across the country. It felt like magic. We have never been so prosperous, and we have become so without doing anything.
Here we have one of the great lies in human history. The wise among us have always known that could not be true. You can’t shut down an economy and make everyone richer than ever. Also, it didn’t last that long. After less than a year, the amazing bill came due. Inflation has taken 14% from savings, salaries and the wise. It shattered business investment. It killed the long-term prospects of producers and consumers. Today, almost everyone is struggling against winds and tides to preserve the illusion of a dying prosperity.
We have been fed the biggest lie in economic history. Even now, many people believe in it. More profoundly, the false prosperity of 2020-21 has instilled widespread public cynicism. It seemed for a while that the whole system was a racket. There are no limits to what Congress can spend and what the Fed can print. Money is just paper and there is an infinite amount of it. Why not go all the way and spread it as far as prosperity? Who needs work? Who needs savings? Who needs investment?
The devil himself couldn’t have built a better game to shatter all normal senses of reality, confuse the populace, and devastate the established values of countless generations. The great false head of 2020 has taken away our intuitive sense of cause and effect in the economic, social and cultural realms. The whole system has a scam feel to it today because that is what it is.
The great 19th century economist Frédéric Bastiat pointed out that the real costs of policy-inspired destruction are not what you see but what you don’t see. It’s the investment that didn’t happen, the income that we didn’t make, the savings that we would otherwise have amassed but didn’t, the technologies that might have come into being, the jobs that would otherwise have been created, art and music that never saw the light of day, progress that would have defined our time that we have never seen.
Bastiat called this the difference between what is visible and what is invisible. It takes a certain sense of abstraction, a certain perception that lives in the imagination, to have a full idea of the cost of such devastation. We will never know the fullness of it, but we know it is there. The invisible exists if only in unfulfilled hopes and dreams. True economists, said Bastiat, must see what cannot be seen.
Just a quick example: while Woodstock took place during the 1968-69 pandemic, most arts venues were abruptly closed during it, some for up to two years. Tanglewood, one of our nation’s most revered arts institutions, just closed as if art and music didn’t matter. This vast enterprise worth hundreds of millions suddenly saw itself as useless. Talk about a lack of trust in the culture!
In this case, only the governments did this at Tanglewood. The institution itself has internalized its own uselessness and kept itself closed for far longer than was even necessary. They imagined that they were virtuous in protecting everyone. They ended up betraying their benefactors and patrons, not to mention the artists who relied on them to stay open even in difficult times.
So it went for institutions across the country. Small businesses, civic associations, churches, workers, savers and investors, and just about everyone but public health bureaucrats have all felt worthless at best and propagators of the virus at worst. toxic diseases.
In short, if it was just a conventional recession, we would be very lucky. What happens in the trendlines of each important metric is shocking. But the real devastation is in the realm of the unseen: the progress and the freedom that we have been deprived of. We know who did this to us. It is they themselves who made the desolation and who now call it transition.
The opinions expressed in this article are the opinions of the author and do not necessarily reflect the opinions of The Epoch Times.