3 Charts That Show How Healthy the Economy Really Is
Economic thought has been around as long as people have, but the deliberate study of economics as we know and love it today really began in 1776, coincidentally the birth year of the United States. If you’re an academic or a wonk, you may know that 1776 was also the year that Adam Smith published The Wealth of Nations, which established much of the intellectual framework still used by businesses, economists, and politicians. This is where the famous “invisible hand” conceit was born, and along with it, the tradition of classical economics.
But the economic intellectual tradition did not begin with Smith, and it doesn’t end with Smith, either. Today, popular economic thinking in the United States is dominated not by one school of thought but by an eclectic many. Since many of the social philosophies of Democrats and Republicans are inseparable from the economy, the landscape of economic thought is as dense, entrenched, and divisive as the political landscape.
As a result, we live in a kind of an insane time for economics. Not only did the late-2000s financial crisis knock the global economy on its ass, but policymakers and the public have been bitterly divided over how best to react, recover, and move forward. Even worse — people disagree about how to even interpret much of the economic data being reported by the government and private or quasi-public researchers, and people even question whether the data is trustworthy.
The situation is toxic and the liberal-leaning economist Paul Krugman has gone as far as to argue that some prominent economic thinkers have become delusional. Krugman points not to heterodox extremists but to “famous Harvard professors” who believe, for example, that the government may be publishing false inflation or employment data.
Most of us get left in the dust as pundits and politicians exchange artillery fire, and what should be a conversation about public policy and new economic thinking has devolved into a cacophony. Healthy skepticism has been replaced by dogmatism in some and apathy in others, and as a result, the national dialog is misguided and aggressive.
There’s no quick fix, but the first step is probably one back so we can get a better look at the big picture. Here are three charts that hopefully shed some light on what’s going on in the headlines.