THE WALL STREET
Feb 13/09. President Barack
Obama has turned fear mongering into an art form. He has repeatedly
raised the specter of another Great Depression. First, he did so to win
votes in the November election. He has done so again recently to sway
congressional votes for his stimulus package.
In his remarks, every gloomy
statistic on the economy becomes a harbinger of doom. As he tells it,
today's economy is the worst since the Great Depression. Without his
Recovery and Reinvestment Act, he says, the economy will fall back into
that abyss and may never recover.
This fear mongering may be good
politics, but it is bad history and bad economics. It is bad history
because our current economic woes don't come close to those of the
Auto production last year
declined by roughly 25%. That looks good compared to 1932, when
production shriveled by 90%.
Mr. Obama's analogies to the
Great Depression are not only historically inaccurate, they're also
dangerous. Repeated warnings from the White House about a coming
economic apocalypse aren't likely to raise consumer and investor
expectations for the future. In fact, they have contributed to the
continuing decline in consumer confidence that is restraining a spending
pickup. Beyond that, fear mongering can trigger a political stampede to
embrace a "recovery" package that delivers a lot less than it promises.
A more cool-headed assessment of the economy's woes might produce better