Economics — to most people as useful a course of study as ancient Bulgarian literature — is really the study of human behavior. This kind of behavior is labeled “emergent” — meaning it is a large-scale pattern that emerges spontaneously out of the interactions of numerous individuals each independently following a more local program. (In the case of the economy, this more-local program is the perceived self-interest of each of the millions of people within the economy.)
Because of the huge number of factors involved, and the constant feedback of one factor on another, predicting emergent effects is as difficult as predicting next year’s hurricanes. This is why economists follow so many indicators, do so much math, and often end up wrong anyway.
But there are times when the economy is not a purely emergent effect — when the behavior of a significant number of individuals is effectively coordinated by an outside force. A prime example is the final ending of the Great Depression by World War Two. During the Depression, deflation and unemployment created an emergent cycle of fear and uncertainty that undermined investor and consumer confidence. The ensuing reductions in spending, investment, and risk-taking lead to further deflation and unemployment.
The needs of national crisis and war brought this cycle to a sudden and non-spontaneous end. The unemployed were drafted or put to work in support of the troops. The hard break in psychology and behavior (aided by propaganda) then helped to prepare the way for the return of confidence and economic growth following the war.
This presidential election year may prove to be another example of economic tone and human behavior being determined by war and propaganda. The war in this case is the American equivalent of the modern civil war: a presidential election. The propaganda will be spontaneously offered up by the mainstream media in support of their favored party.
Highlighting economic (and other) bad news anytime it can be pinned on a Republican incumbent (or his successor) has been standard procedure in the left-leaning media for decades. They exaggerated the mild, brief recession of 1992 into “the worst economy in fifty years”. No one really believed that the economy was worse off then than it was, say, during the late 1970’s. However, facts mattered little and were only a starting place for much somber “reporting” in support of Bill Clinton’s gloomy talking points. “Talking down” the economy to bolster a Democrat challenger is nothing new.
And several factors could make this year’s talking-down much worse than usual.
Unlike 1992, this economy faces real and significant structural problems. Housing prices have crashed, lending has contracted, the dollar has been halved, oil prices have soared, and food prices have been biofueled up to recent highs.
All these issues have taken a huge toll on consumer confidence, pushing it — and the stock market — to the lowest levels in years. And consumer confidence is precisely what is targeted by exaggerated election-year doom-mongering from the mainstream media. Given the already anemic state that confidence is in, it may not take much hyperbole and rant to send it into a tailspin — especially since the media will have much better ammunition to work with in such an already worrisome economic environment.
Another factor that could make this election into an economic disaster is the amazing amount of pent-up hate and disdain that much of the media has for George W. Bush. It doesn’t matter to them (or other Democrats) that he is not running for re-election and that John McCain is a very different man, with his own policies, and no great personal love for Bush. The left sees this election as a reactionary holy war — a chance to “take back” the country from a hated, demonized (and plainly incompetent) figure. Self-restraint will likely not be in fashion for Democrat journalists between now and November — especially when compounded by the third factor pointing toward a coming propaganda war against the American economy — Obamamania.
Obama’s greatest support comes from two distinct groups. One is upper middle-class, college-educated white liberals — or as I like to call them — “journalism majors.” The other group is blacks — the favorite victim class of journalism majors. It should be no surprise then that Obama is being hailed as something akin to a reincarnated hybrid-idol, Martin-Luther-John/Bobby-Kennedy-King. For the mainstream media, Obama will be the most instinctively protected presidential candidate in history. He will be above criticism, a sacred cause, and a personal mission for many journalists.
Together, these factors could combine to ensure that this year’s economy is no random and autonomous event. The economy will very likely be wounded deeply by the media, so that Obama can ride its limping form to the White House. Even if good economic news were to occur in the next few months, I can’t imagine that it will be reported by most outlets.
Most politicians have to actually get into office to cause a severe recession. Obama (and his supporters) may cause one as collateral campaign damage before a single vote is cast.
The future is never certain, but this may be one chapter in which the script has been written and the actors will deliver their lines predictably.