Our Panicmonger-in-Chief

| January 9, 2009 | 2 Replies

Today, Barack Obama had this to say about our economy, prompted by the announcement that our unemployment rate is 7.2 percent.

The unemployment rate is now well over 7 percent. In addition, we have 3.4 million people who want full-time work but are only able to get part-time work. Clearly, the situation is dire. It is deteriorating and it demands urgent and immediate action…

But let me be clear, today’s job report only underscores the need for us to move with a sense of urgency and common purpose…

There is a devastating economic crisis that will become more come more difficult to contain with time…

What, exactly, is the crisis? Indeed, we have lost more jobs this year than any year since World War II, but we also have an astonishingly low unemployment rate. That means that jobs are still available. Employers are still creating jobs while other companies are contracting.

Of course that will all end if Barack Obama’s plan goes into effect and sucks a minimum of one trillion dollars out of the pockets of the people who actually create jobs (as opposed to the government which destroys them).

Let’s look at history.


In December, 1974 unemployment hit 7.2 percent. It jumped almost a full percent to 8.1 percent the next month. Two months later it jumped another half point and hit 9 percent by May, 1975. It didn’t go back under 7 percent until July of 1977. Two and a half years we lived with unemployment over 7 percent and most of that was over 8 percent, but the republic didn’t fold and our economy didn’t collapse. In fact, just two years later, unemployment was under 6 percent.

We jumped over 7 percent again in May, 1980 with a rate of 7.5 percent (up over half a point from the month before). We stayed over seven percent until January, 1986. That stretch makes what we’re going through look like the Roaring ’20s. By 1982 we were at 9 percent and at the end of that year we were seriously flirting with 11 percent unemployment. We spent 18 months over nine percent.

Does anyone remember things falling apart? Were we “devastated”? On the contrary. Our country rebounded without massive government redistribution programs and by the end of the decade we were regularly in the low fives. The period of the late 80s was the largest peacetime economic boom we had ever seen. It kept on booming until George H.W. Bush decided that government needed to fiddle with the economy, after which we saw rates back in the mid sevens again.

Indeed, the unemployment rate increase of 1.8 percent in 2008 isn’t even the worst 12-month rate of increase I’ve seen in my lifetime. It’s not even the second-worst. Seven percent is not “a devastating economic crisis”.

The truth of our economy is that it is incredibly resilient and far from seriously wounded. What is hampering it – what has been hampering it from the very beginning – is government officials who believe they know what we need better than we do. It started with Jimmy Carter, got serious muscles with Bill Clinton’s blackmail program against banks forcing them to give crap mortgages, and found new life thanks to George W. Bush’s combination of “compassionate conservatism” and utter inability to stand up to Congressional Democrats.

What we need right now, more than anything, is for government to back the hell off. It will help matters dramatically if the President-Elect wasn’t always exaggerating the problems we have to make them look much worse than they actually are. He needs to get a grip and remind us that, even though the economy is bad, things have been a lot worse and we’re in a much better situation to fix our own problems today than we’ve ever been. That, at least, would have the benefit of being unequivocally true.

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Category: President Barack Obama, The Economy and Your Money

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