Opinion

The Edgy Optimist

The audacity of optimism

Zachary Karabell
Dec 23, 2013 20:46 UTC

Over the past four weeks, we’ve had a run of undeniably good news. A panoply of data has shown that the U.S. economic system appears to be on firm ground. More people have jobs, albeit not necessarily sterling jobs, and the pace of overall activity as measured by GDP is at the highest level in two years, expanding at 4.1 percent annually. On the political front, Congress passed a budget for the first time in more than three years, which suggests a period ahead where Washington tantrums do not threaten to upend whatever delicate equilibrium currently exists.

And yet, an aura of unease still seems to hover over us. In the year or more that I have written this column, I have often emphasized the way in which things may be going at least a bit right. That contrasts with the frequently repeated mantra that we are going dangerously off the rails. Of course, like anyone, I may be right or wrong or somewhere in between. What’s been perplexing about responses to this column, however, isn’t whether the analysis is right or wrong, wise or naïve, but that the very hint of optimism makes a fair number of people extremely angry.

It may be, of course, that my optimism is misplaced. It may be that the United States is actually headed to hell in a proverbial handbasket; that Europe is in a brief lull before its next leg toward dissolution of the Union; that Japan’s easy money spigot unleashed by the new government of Shinzo Abe will end with the same no-exit stagnation of the past 20 years; and the glorious story of emerging economies from Brazil to Mexico to India to China will end not so gloriously. It may also be that whatever appears to be working in the developed world is in truth working only for a small minority — for the wealthy and members of the middle class in privileged urban areas, and for anyone tethered to financial markets and global commerce.

But possibly being wrong doesn’t explain the anger my columns have provoked, in the form of email and online reactions. Weather forecasters and sports experts are routinely wrong about outcomes, and while those missed predictions can trigger some ridicule, they’re not usually a recipe for rage.

True, the online world of comments and commentary skews towards the negative, especially in the realm of economics and politics. People are more likely to express feelings based on disagreement and a sense of outrage than they are to react based on concord. Anger is a hot experience that triggers action; agreement, even strong agreement, tends to be a more passive reaction.

Why Washington’s growing irrelevance is good for the country

Zachary Karabell
Dec 13, 2013 19:52 UTC

After three years of sclerosis, Congress is poised to at last pass an actual budget. We’ve been so consumed with the dysfunction of the parties on Capitol Hill that this feat appears significant. In fact, it should be routine. Yet in the context of the past few years, it is anything but.

The budget that passed the House still must wend through the Senate, and it is not exactly a study in legislative daring. It is, however, an actual budget, passed with substantial support from both parties by a vote of 332 to 94 and negotiated by two leaders, one from each party and each chamber — Representative Paul Ryan (R-Wisconsin) and Senator Patty Murray (D-Washington). The bill is the most modest endorsement of the current status quo, which stems from both the automatic and crude 2013 budget cuts known as the sequester, and from the chronic inability of either party to compromise over the past three years.

Even though the only real change over current spending is a modest $60 billion increase (meager in relation to the $15 trillion-plus U.S. economy), conservative groups still condemned it as too profligate and liberal groups assailed it as too draconian. Said Ted Cruz, who may be having mild limelight withdrawal, “The new budget deal moves in the wrong direction: it spends more, taxes more, and allows continued funding for Obamacare…I cannot support it.” Paul Krugman argued the contrary — that the bill is too meager, and does nothing to address the problem of structural, chronic unemployment. Writes Krugman: “if you look at what has happened since Republicans took control of the House of Representatives in 2010 — what you see is a triumph of anti-government ideology that has had enormously destructive effects on American workers.”

The real issues behind the minimum wage debate

Zachary Karabell
Dec 6, 2013 18:03 UTC

In his speech at the Center for American Progress this week, President Obama devoted considerable time to an issue suddenly much in discussion: the minimum wage. This is not a new debate. In fact, it neatly echoes the last time Congress raised the minimum wage, in 2007, which echoed the debates before that. Few economic issues are such sweet catnip to ideological camps, and there is precisely zero consensus about whether these minimums have positive, negative or no effect.

Supporters say that a higher minimum wage will give people a better standard of living and boost consumption. Detractors argue that it will lead companies to hire fewer workers and kill job creation. One thing no one addresses, however, is that regardless of whether the government raises the minimum wage, our society can’t endlessly coast with a system that includes wage stagnation for the many and soaring prosperity for the few, nor can the government snap its legislative fingers and magically produce income. Someone will pay for these increases; nothing is free.

You wouldn’t know that from the tenor of the debate. In Obama’s speech, he stated that, “it’s well past the time to raise a minimum wage that in real terms right now is below where it was when Harry Truman was in office.” He acknowledged that many resist the idea of mandating a wage above the current $7.25 an hour. “We all know the arguments that have been used against a higher minimum wage.  Some say it actually hurts low-wage workers — businesses will be less likely to hire them.  But there’s no solid evidence that a higher minimum wage costs jobs, and research shows it raises incomes for low-wage workers and boosts short-term economic growth.”

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