Kinsley left a comment on my post, but I want to make sure it doesn’t slip through the cracks. Here’s his response in full:
Ryan [Chittum] [correcting a misspelling of my name] writes that I “flub the numbers and the argument” in my Politico column this week. He does not understand my argument: I’ll take the blame for that. I guess I wasn’t clear. I’ll take the blame, too, for one wrong number. It’s not a math mistake, and it doesn’t affect the argument I was trying to make. Chittum will have to take the blame for his nasty tone.
My point was not that economic distress “is more of a feeling than a reality,” as Chittum summarizes. In fact he quotes—and then ignores—what I say high up in the piece, which is that many people are “suffering, losing their houses or their jobs.” The column had two purposes. First, it was an attempt to puzzle through why this should be the case when GDP in real terms is about the same as it was in 2007, when times seemed good. I concluded that the main cause of this is growing disparities in wealth and income. If a few have more and most have less, the total can still be the same. Chittum quotes this passage also, and then ignores it.
My second purpose concerned the deficit. It was to argue that despite all the talk (from me, among others about the “sacrifice” needed to solve the deficit problem, these GDP figures suggest that the sacrifice would not be all that great, if we were all willing to go back to where we were financially in 2006 or so, when times did not seem so bad. the difference between then and now would be enough to solve the problem.That would involve a greater sacrifice by wealthy people, who would have to give up their disproportionate share of economic growth (a point I didn’t make but should have). I suspect that many of the unemployed and those who have lost their houses also wouldn’t mind going back to where things stood in 2006. Maybe this is a dumb point, since there is no way we can actually go back to 2006. I thought it was interesting. Mea culpa.
It’s true that this is all about income, and even those who still have jobs and houses have taken a big hit in wealth, at least on paper. But the houses are still there, as are the factories, etc., that are represented by shares of stock. Is their true value represented by their price in 2007, or their price now? In a way, the whole economy depends on what theatre types call the “willing suspension of disbelief.”
I am a deficit hawk. I think the national debt is having serious negative consequences, and there is no sign of anyone doing anything about this. (I don’t say do something about it now, when we’re still coming out of the recession, but do something now that will convince the world that we are serious about doing it later.) I spent the 80s and 90s arguing with conservative Republicans who wanted tax cuts and said the deficit didn’t matter. It looks like I’ll be spending the next couple of decades arguing with liberals who want more government and think the deficit doesn’t matter.
Anyway, my erroneous number, for which I apologize. When I cited GDP in 1985, I said that was in 1985 dollars. In fact, it was in 2005 dollars, just like all the other GDP figures I used in that column. And the point remains true: accounting for inflation (ie, in 2005 dollars), GDP has almost doubled, from $6.8 trillion in 1985 to $13.3 trillion in Q3 of 2010.
Thanks very much.