Can We Believe It?

I am far from alone in my skepticism about the “optimism” being expressed about recent economic statistics.  Bob Herbert in his New York Times column today noted how shallow and misleading the evidence for a recovery is, and even the lead article on the front page, subtitled “Some Economists Say Worst May Be Over,” quotes Dean Baker, co-director of the Center for Economic and Policy Research in Washington, saying, “This isn’t recovery. It’s a slowing recession.”

Clearly many, including the administration, would like us to be optimistic about a recovery because optimism (or “confidence” as it used to be called) encourages consumers and investors to reenter the market and that, in itself, contributes to a recovery.  But this “optimism” seems to be done with mirrors.  A slowing of the pace of decline hardly indicates a turnaround, as we have little idea how long this new slower rate will last.  We could just as easily say that the recession itself is a harbinger of recovery as once we enter a recession will will have to come out of it.  Right?

But people are  not optimistic just because the administration or Wall Street wants them to be.  We desperately want to be optimistic too — or many of us.  That’s where we have to watch ourselves:  believing what we want to believe.

Apart from deluding ourselves and making bad decisions, we have to watch ourselves because it introduces further divisions into out already badly divided society.  We are all affected by this economic catastrophe but we are not all affected the same.

Remember that the sub-prime mortgage debacle came about because of the millions of poor Americans lured into fulfilling their dreams of home ownership or getting quick and easy cash from home equity loans.  To be sure it was the reckless repackaging of those loans that touched off the crisis, and many rich or merely comfortable investors lost a lot of money when those securitized “assets” vanished. But then there were those who actually lost their homes.  And those who lost their jobs and who are still unemployed — even though the rate of increasing joblessness is not increasing as fast as it was.

What we sometimes don’t know we know is how selective memory is, and how easily our wishes shape our perceptions.