44 online
 
Most Popular Choices
Share on Facebook 8 Printer Friendly Page More Sharing
OpEdNews Op Eds   

The Misery Curve

By       (Page 1 of 1 pages)   No comments
Follow Me on Twitter     Message James Brett
Become a Fan
  (2 fans)

The strange graph above is from the New York Times Sunday, July 5, 2009 edition. It is a complex diagram designed to show how real business cycles vary according to severity of downturns and the nature of upturns. Instead of stringing this information out in a linear way, approximating something like a sine wave, the author "condensed" time into color (as shown on the inset) with the orange beginning the graph in 1970 and the dark blue ending in May 2009.

If this were a textbook diagram the four parts of a business cycle: Expansion, Slowdown, Downturn, and Recovery would describe a circle and students would get the idea that (due to the regularity of circles) that business cycles are somewhat orderly and predictable. As the diagram above shows, nothing could be further from the truth!

You should trace the progress of our industrial output (and this is the only element of the economy this graph illustrates, by the way) before we go on with the explanation. You will see that some "cycles" are in close tightly to the origin, the place where the two axes cross. A small tight curve circuit illustrates a modest recession and a short cycle.

If you imagine our economy to be comprised of "mixed" inputs (modest regulation, such as EPA, Federal Reserve, SEC, corporate law, etc.) you will see the result of manipulations in the zigging and zagging of the curve line, particularly in the Expansion domain of the cycle.

You will also notice some "tight" turns and some very "broad" and "slow" turns in the graph line. These may be seen as artifacts of human intervention, perhaps a stimulus bill passing Congress or a change in Federal Reserve interest rates, or new tax laws. Without human intervention the cycle would not be the the ideal circular process of textbooks either, though. The history of 18th and 19th century cycles suggests that the radical turns and gyres would be all the more radical and immiserating.

There is one thing that the Times article failed to note in the accompanying article and analysis. It is a crucial point and it is a withering indictment of our system of regulating the economy. You will notice this best with the more recent blue line, but it is the case for all circuits through the four phases.

The problem is this: the area under the curve in each quadrant is decidedly unequal. The area under this curve represents efficiency (including hope, optimism, and progress among other social moods) in the upper right and inefficiency (stagnation, regress, and pessimism among other social moods) in the lower left. In this sense you can interpret the graph as a general description of the effectiveness of our economy. Plainly, whatever we are doing is progressive way less than half the time!

I am quite aware that "free marketeers" believe that the modest regulations we have in place now are exactly what inhibits progress and engenders the awful trips into downturns and recessions. It is odd, though, that for all our combined wisdom and hopefulness that everything we touch turns south. In fact, the free-marketeers' interpretation neglects the essential truth of the matter, namely, that regulation is so contrived and constricted as to be almost helpless in curtailing long ugly, painful excursions into the down sides of the cycle.

For me the graph is an oracle. It clearly shows that our system does not work to the advantage of the vast majority of people who contribute to the economy. Rather our "system" is fatally flawed and a horror, which like a prisoners manacles, we have gotten used to, but are clearly impeding our best hopes and aspirations.

It is time to do something about this now!

Oh, and by the way, ... if you look at the May 2009 part of the curve you will notice that it is tending back to the right ... which is good ... but it is tending at a much faster rate south ... which is definitely bad. This makes me wonder why Newsweek this week is splashing "The Recession is Over!" on their front cover. Believe me, we have a long, hard way to go yet ... and nothing is guaranteed. This misery could last for years and years!

JB

Rate It | View Ratings

James Brett Social Media Pages: Facebook page url on login Profile not filled in       Twitter page url on login Profile not filled in       Linkedin page url on login Profile not filled in       Instagram page url on login Profile not filled in

James R. Brett, Ph.D. taught Russian History before (and during) a long stint as an academic administrator in faculty research administration. His academic interests are the modern period of Russian History since Peter the Great, Chinese (more...)
 

Go To Commenting
The views expressed herein are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.
Follow Me on Twitter     Writers Guidelines

 
Contact AuthorContact Author Contact EditorContact Editor Author PageView Authors' Articles
Support OpEdNews

OpEdNews depends upon can't survive without your help.

If you value this article and the work of OpEdNews, please either Donate or Purchase a premium membership.

STAY IN THE KNOW
If you've enjoyed this, sign up for our daily or weekly newsletter to get lots of great progressive content.
Daily Weekly     OpEd News Newsletter
Name
Email
   (Opens new browser window)
 

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

Economy v. Ecology

VP Debate: One Gigantic Mistake by Sarah Palin ... Huge!

Tell It Like It Is

The Meaning of the Mike Connell Story: Under the Bus

Capitalism, Fascism, and Socialism

The End of the Marshall Plan

To View Comments or Join the Conversation:

Tell A Friend