Defining Economic Failure Down

Two phrases that Daniel Patrick Moynihan put into America’s political lexicon two decades ago are increasingly pertinent. They explain the insufficient dismay about recent economic numbers.

Moynihan said that when deviant behaviors – e.g., violent crime, or births to unmarried women – reach a certain level, society soothes itself by “defining deviancy down.” It de-stigmatizes the behaviors by declaring them normal. And sometimes, Moynihan said, social problems are the result of “iatrogenic government.” In medicine, an iatrogenic ailment is inadvertently induced by a physician or medicine; in social policy, iatrogenic problems are caused by government.

When the economy grew by just 2.6 percent in 2014’s fourth quarter, The New York Times headline cheerfully said “Economy Pulls Ahead.” The story said the U.S. economy is “an island of relative strength” in a world facing “renewed torpor and turmoil.” This was defining failure down.

The Wall Street Journal said “U.S. Economy Hits Speed Bumps,” as though speedy growth had been normal for a while. The speeding had consisted of one quarter (2014’s third) of 5 percent growth. But the economy had gone 43 consecutive quarters without 5 percent growth, the longest such period since the government began keeping the pertinent records in 1947. And even with this third quarter, growth for 2014 was just 2.4 percent, making this the ninth consecutive year under 3 percent. During the recovery from the recession of 1981-82, there were five quarters of 7 percent or higher growth, and five years averaged 4.6 percent growth.

There also was unmerited triumphalism about November’s job growth of 353,000. This was just the fifth month of 300,000-plus growth in the 68 months since the sluggish recovery began in June 2009. In the 1960s, there were nine months of 300,000-plus job creation – and at its highest, in 1969, the nation’s population was nearly 118 million smaller than today’s. In the 1980s, there were 23 months of 300,000-plus jobs, and the nation’s population in 1989 was 73 million smaller than today’s 320 million.

By the time – April 2014 – the economy returned to the number of jobs it had before the recession began in December 2007 there were 15 million more Americans. Nicole Gelinas writes in the Manhattan Institute’s City Journal: “A healthy economy should add 200,000 new jobs every month, even when it’s not recovering from a recession. By that standard, America should have 133 million people working in the private sector right now, not 118.4 million.”

Economic weakness – new business formations are at a 35-year low – is both a cause and a consequence of alarming cultural changes. In 1960, 12 percent of 25- to-34-year-olds were never married; today, 49 percent never have been. Although the population was 27 million larger in 2010 than in 2000, there were fewer births in 2010.

The lingering economic anemia is astonishing, given plummeting energy prices. To a considerable extent, the anemia is an iatrogenic social ailment, induced by government behavior. The business burdens and uncertainties created by the Affordable Care Act are just part of the Obama administration’s regulatory mania (3,659 new regulations finalized in 2013 and another 2,594 proposed, according to Wayne Crews of the Competitive Enterprise Institute).

That the employment picture is not worse may owe much to the end of an iatrogenic policy. The Economist reports that during the recession, unemployment benefits were extended from 26 weeks for most workers to an average of 53 weeks, and 73 weeks in three states. Then in December 2013 Republicans blocked reauthorization of Emergency Unemployment Compensation. Now a study of 1,000 counties shows that employment grew fastest in counties where there were the biggest declines in the duration of unemployment benefits.

Barack Obama’s plan to tax the earnings from parents’ “529” college savings plans lived just long enough to indicate why some progressives perhaps prefer slow rather than rapid economic growth. Rapid growth reduces the appeal of redistributive policies and the need for the bitter, jostling, divisive politics that advance such policies. The 529s help enable families to achieve self-sufficiency. This excites progressives’ dislike of any private provision that impedes implementation of their dependency agenda.

The progressive project of maximizing the number of people dependent on government is also aided by the acid of insecurity that grows rapidly when the economy does not. Anxious and disappointed people are susceptible to progressives’ blandishments about the political allocation of wealth and opportunity – “free” this and that. By making slow growth normal, iatrogenic government serves the progressive program of defining economic failure down.

The Patriot Post® · Defining Economic Failure Down