Now raising intellectual capital
Barring any unexpected stumbles, and revisions aside, today will be the last time this year that Americans are told their economy is shrinking.
Indeed, the modest one percent decline in second-quarter gross domestic product could be followed by growth rates as high as three percent in the final six months of the year.
But good economic news can be dangerous, as the Great Depression showed. As growth bounced back after 1933, complacency set in, leading to premature demands for an unwinding of government stimulus and tighter monetary policy.
The result was a second downturn in 1937, as Depression scholar and Obama adviser Christina Romer has pointed out.
President Obama says he wanted a “light touch” in his adminstration’s approach to regulatory reform. And he certainly appears to have gotten that, after a quick read of a draft copy of the administration’s 85-page “white paper.”
Much of the meat of the reform package has been known for quite a while and some of it–like the plan to create a new consumer financial products protection agency–is good. But too much of the reform proposal seems more aspirational than anything else. I stopped counting, but the word “should” appears throughout the text far too many times.