The current deepening economic sickness is beginning to really hit close to home. A friend on Facebook, after several days of status updates announcing that she feared for her job, finally updated her status last week to read that she was “thanks to the economy, now gainfully unemployed.”
Two days ago, NPR announced that it, too, would be forced to make cuts in the current malaise: it announced that it would be cancelling the shows “Day to Day” and “News and Notes”, both of which are based out of Culver City here in L.A. What was particularly disturbing about the announcement for me was that I had met the hosts of both these shows a couple times through a friend. It’s generally hard to feel the pain of some faceless radio host or journalist whose show has been cancelled – but it strikes you a little differently when you’ve met and talked to these people about the neighborhoods they live in here in L.A., their interviews with Barack Obama, the inside baseball of NPR politics.
Things continue to get uglier, and the worry right now is that the general climate of fear is causing even people with relatively stable employment to fear that the Reaper is on his way for them, and that they must therefore start cutting back and saving everything they can for a potential span of unemployment in the near future. That fear and cutting back among people who actually have money right now leads to the excessive savings (among those with disposable income) that drives the economy further down the crapper.
It’s hard to know how best to handle this, but I am generally supportive of Obama’s announced Keynesian approach of large public works spending. That said, with the dollar currently in freefall, it’s worth a nod to Milton Friedman and the danger of stagflation, though perhaps with the costs of commodities like oil currently in freefall, a danger of a repeat of 70’s-style stagflation seems less likely. The public-works approach of Keynesian-style deficit-spending right now also appears acceptable given that interest rates are so low – the danger of crowding out driving up interest rates seems minimal for the near future.
But the real fear is that no one really knows what the f*ck is going on, and therefore, no one really knows how to fix the situation. I suspect that the complexity of the situation is at such a magnitude that it defies the ability of even our best economists to fully comprehend. That's why, in some way, the most powerful thing we can do right now -- though I debase these terms in using them in the context of the marketplace -- may be simply to have faith, and believe. We will escape from this downward spiral only if we are able to shake off our collective fear. Ironically enough, now is the time to heed the words of that great economic thinker, President George W. Bush: the best thing you can do right now to help fix the economy is to go shopping.