It’s worse than anyone wants to admit


Yesterday’s news was entirely consumed in the throes of another change of definition. What everyone understood as what it means to be in a recession was suddenly changed by the government’s edict. It is not a recession, they say.

Everything is going great, they say, unless you are among the troglodytes who crave energy, food, shelter, and generally human prosperity in abundance and at a low price. Once you understand the beautiful world on the other side of the “transition,” to use the White House’s favorite word, you would see this suffering as actually beneficial in the long run.

These broken eggs are making omelets.

We can argue all day about the definition of a recession, but it doesn’t get us into the intellectual place we need to be. The bottom line is that what we are experiencing now includes anomalies of previous downturns precisely because it is much worse. Just a few months ago, many feared that we would go back to the 1970s. That box has been checked. Then we worried about going back to the 1930s. My fear is that we may wish it were true.

The White House talks about the low technical unemployment rate without referring to the falling job participation rates that have never recovered from lockdowns because so many people have just left the workforce. Millions of formerly employed Americans live on the generosity of families or take advantage of abundant unemployment benefits just to earn month to month. Real wages and salaries have been slammed, savings rates are plummeting, and credit card debt is exploding.

It is all difficult to put into a picture, but we can prove, nowhere more clearly expressed than the change in real wages and savings, than saving as a percentage of personal income. The stable public data here dates back to the 1960s and here we see how shocking these times really are. Personal savings are half of what was typical from the 1960s to 1990s, and even as recently as 2012. Real personal disposable income is falling dramatically.

You have the image of a once thriving nation being pummeled by looting public leaders.

Photo by Epoch Times
(Data: Federal Reserve Economic Data [FRED], St. Louis Fed; Graphic: Jeffrey A. Tucker)

What is particularly striking is how difficult times were preceded shortly before by one of the most ambiguous fakes in history. Immediately after the lockdown, the government flooded the frozen economy with trillions of dollars, pumped directly into bank accounts across the country. It felt like magic. We have never been so prosperous, and we managed to do it by DOING NOTHING.

Here we have one of the great lies in human history. The wise people among us have always known it couldn’t be true. You can’t shut down an economy and make everyone richer than ever. It also didn’t last that long. After less than a year, the surprising bill arrived. Inflation has taken a 14 percent bite from savings, wages and essays. It shattered corporate investments. It killed the long-term prospects of both producers and consumers. Now almost everyone is struggling against all odds to preserve the illusion of prosperity that is dying to death.

They fed us the biggest lie in economic history. Even now many people believe it. More deeply, the false prosperity of 2020-21 instilled widespread public cynicism. For a while it seemed like 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 supply of it. Why not do the whole pig and spread it far and wide like prosperity? Who needs work? Who needs savings? Who needs investments?

The devil himself could not have built a better game to shatter all normal senses of reality, confuse the population, and devastate the established values ​​of countless generations. The big fake of the head of 2020 has taken away our intuitive sense of cause and effect in the economic, social and cultural realms. The whole system today has the scam feeling because it is what it is.

The great economist Frédéric Bastiat in the 19th century pointed out that the real costs of policy-inspired destruction are not what is seen, but what is not seen. It is the investments that did not take place, the income we did not make, the savings that we would otherwise have undermined but did not, the technologies that could have arisen, the jobs that would otherwise have been created, art and music that has never seen the light, the progress that would define our times 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 within the imagination, to get a full sense of the cost of such devastation. We will never know its fullness, but we know it is there. The invisible exists at least in unfulfilled hopes and dreams. True economists, Bastiat said, must see what cannot be seen.

Just a quick example: While Woodstock took place during the 1968-69 pandemic, most art venues were brutally closed during this, some for two years. Tanglewood, one of our nation’s most revered arts institutions, simply shut down as if art and music didn’t matter. This vast enterprise worth hundreds of millions suddenly saw itself as unnecessary. Talk about a lack of trust in culture!

In this case, it was only the governments that did this in Tanglewood. The institution itself internalized its uselessness and kept itself closed for much longer than necessary. They imagined they were virtuous in keeping everyone safe. They only ended up betraying their benefactors and clients, not to mention the artists who depended 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 almost everyone but public health bureaucrats, all felt useless at best and toxic at worst by spreading disease.

In short, if this were just a conventional recession, we would be very lucky. What is happening in the trend lines of each important metric is shocking. But the real devastation is in the realm of the invisible: the progress and freedom we have been robbed of. We know who did this to us. They are the same people who created desolation and now call it transition.

The views expressed in this article are the views of the author and do not necessarily reflect the views of The Epoch Times.

Jeffrey A. Tucker

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Jeffrey Tucker is the founder and president of the Brownstone Institute and the author of many thousands of articles in the academic and popular press and ten books in 5 languages, the most recent “Liberty or Lockdown”. He is also the editor of The Best of Mises. He writes a daily economics column in The Epoch Times and talks extensively on topics in economics, technology, social philosophy and culture.


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