It's Good; It's Bad; It's Both

Judging the economy

Yes, the economy is not in good shape these days.  Yes, the economy is better than it was four years ago, or even before Covid.  No, this is not a contradiction. 

For those in poverty, or living paycheck to paycheck, or facing mounting medical bills, or taking care of aging parents, or trying to put their children through college, it’s not good. Of course, we will tell them that this theory, and that study, and that understanding of history, politics or economics explains it all, and they are living in “better” economic times than people in the past, or people elsewhere, or what would have been, except for President X and President Y.

I understand some of this. At least the part that is not obscured by “gobble-talk,” what philosophers call “word-games.” But my cards are on the table when I talk about the economy. I think it is a human construction and I believe that we are smart enough to remake what others, like ourselves, have made for another moment in time.

A modern economy is guided by decisions made again and again in legislatures, executive bodies and courts.  It is a regulated capitalist system, that is, it allows private ownership, enforces contracts, limits transaction costs, and strengthens markets for the sale of goods and services.  For many products it authorizes governmental bodies to make purchases on behalf of their citizens.  These are mostly goods that are not practically available on private markets, but are desired by majorities of voters in different political jurisdictions.  For partisan political purposes some call such systems Capitalist, and others call them Socialist.  Our language isn’t always exact.

Such naming matters to those who want to “sell” a political agenda to people without the burden of having to explain how the economy works.  Its substance, though, matters to the rest of us. 

Different ways in which the system is structured (moderated, reformed, regulated, managed) lead to different outcomes for groups and individuals who live both within and outside a given political jurisdiction. 

When I say the economy is not in good shape, I am referring to these outcomes. 

In the 1800s the people of Chicago were drinking Lake Michigan water from offshore.  It was contaminated by the outpourings of the Chicago River, which served as a free sewage system for Chicago industry.  The government chose to spend taxpayer money to reverse the course of the river. 

Now Chicago drinking water was improved and the people who lived in towns and villages down river (the new direction) dealt with the contaminated water. 

Those with the power, with the “legal right” in hand, will continue to shift the burdens of an industrial economy, and its rewards, to those people and those areas with more or less power.  This includes waste disposal, monopoly control of economic activity, and the supply of public goods (like transportation, education and communications), legal penalties, zoning laws, wages, profits and much else. 

All this needs to be taken into account, when we say that the economy is in “good shape.” When its capitalist “motor” is running smoothy (highly productive) and when its benefits and costs sum to a reasonable return to those we considerable to be deserving, then I would say it is in good shape.

Since our view of who is and who is not deserving may vary, and our view as to what is “productive” (there are many by-products, long-term and short-term to business practices, product use, and relative availability) is arbitrary, we are not likely to perfectly agree about the “good shape” of any economy. 

That being the case, most of us accept a political system that lets large numbers of people (voters) judge the well-being of the economic system, presumably taking into account practical limits and personal preferences and vote for change or the continuance of present policies.  And if such majorities hold the right values (respect, for instance, for the wellbeing of all) such democratic choice may contribute to “the common good.”

It does come down to comparisons with the present, the remembered past and the foreseeable future. Some of us, in good faith, and sound mind, will judge the economy better under the present administration than it was in the past.  And others will not. And each have every right to disagree with the other. 

Perhaps it would be a good idea for us to discuss our differences as friends (that is citizens of the same community). Though, this advice does come with a warning. If we really get into sharing our respective experiences, values, beliefs and ideas, it may upset supply and demand for, and drive up the cost of, wine, beer or coffee. Such would be the cost of democracy. Call it “good” inflation.

Please comment. I enjoy reading them and apologize for not immediately responding.

Why not share? We all have space in our lives for a little more thinking.

I’m already feeling a bit guilty to subjecting my friends to these musings, but I miss the classroom. And I never closed the door when I was teaching.