Gramm and his whiners

It’s so sad that a brave man opens his mouth to speak the truth and gets pummeled. The best I’ve seen written on last week’s comments is from the Washington Post today. The discussion from Amity Shlaes is on Campaign Economics, that spin we get towards and election.

Gramm was right about the recession and stood by his recession comments on Thursday. A recession is two consecutive quarters in which the economy shrinks, and last quarter it grew. But no matter. Voters feel they are in a recession, and so they are, at least according to Campaign Econ.

Still, to liken the current moment to the Great Depression, or even the early 1980s, as Campaign Economists have, is to whine, just as Gramm said. During the Depression, people lost their homes even though they had borrowed only 10 percent of the purchase price. People losing their homes today frequently have borrowed 90 percent or more. The country approached double-digit unemployment in the early 1980s. This week, even as McCain was trying to talk his campaign past Gramm’s comments, joblessness stood at a historically modest 5.5 percent.

And Campaign Econ has costs. The first is that talk of a downturn — or “mental recession,” as Gramm put — can itself generate a downturn. Keynesian economists say this is so because consumer spending slows when people are afraid. But there’s also a non-Keynesian dynamic. Grumbling leads to costly government rescues that scare markets and slow growth.


  1. I admire Phil Gramm, but (you know what’s coming) how is this different from Obama’s ‘bitter’ comment?

  2. Because Gramm is an old guy that’s no longer elected and Obama is the dude running for POTUS?

  3. Gramm is a principal adviser to one who is running; he was sent out to speak for the campaign.

    He and Obama could have chosen better words, could have skipped the characterization of the public, but there was a core of truth to both remarks.

  4. Nope, I disagree. I don’t think Gramm’s comments are a problem at all. In fact, I’m seeing signs that they might be shifting the debate.

    It will be interesting to watch.

  5. BrkfldDad says:

    Hey, the last two days of polls show a dead heat, something must be happening!

  6. I suppose it could have been worse. Gramm could have called all those people “bitter.”