Marketplace of Ideas Blog

Actually, this item has nothing to do with last night’s defense, if you want to call it that, in the Packers’ 51–29 loss to New Orleans. Included in this week’s ESPN.com Tuesday Morning Quarterback column is this:

Cheerleaders of the Week: Reader John Whitt of Madison, Wis., collectively nominates the all-female cheerleaders of St. Norbert College and the mixed-gender cheer squad of the University of Wisconsin at Green Bay. The Packers have not had official cheerleaders since 1988 — it’s too cold in Green Bay for bikini calendars, anyway — but St. Norbert and UWGB cheerleaders inject college-town pep at most Packers home games. Located in Green Bay, UWGB has one of the top art galleries outside the world of mega-endowment colleges. Located in De Pere, Wis., St. Norbert offers an innovative January term.

I read TMQ for its insight into football coming from a non-sportswriter. Occasionally it has economic insight as well coming from a non-economics writer:

Oh No! Gasoline Prices Are Falling! Just last winter, gas at $4 a gallon was said to represent a super-ultra emergency, and ExxonMobil profits were said to be obscene. Now gas is $2 a gallon and this is bad, according to CNBC economics bobbleheads, who last week warned the lower pump price will depress oil-company profits. Just last winter, rising consumer prices were said to represent a super-ultra emergency — now that consumer prices are falling, that’s supposed to be bad too, owing to the possibility of deflation. But innovation and rising labor productivity are supposed to drive down prices. Lower prices are a core goal of capitalist economics!

These points should serve as reminders that the mainstream media always present all economic news as bad. Higher interest rates? Bad for borrowers. Lower interest rates? Might cause inflation. Normally, the media’s penchant for spinning all economic news as bad doesn’t matter — but right now it does, as pessimism more than logic seems to be driving the weak economy. Speaking as someone who pulled the election lever for Barack Obama (and whose daughter worked for the Obama campaign round the clock for months), I agree with John McCain’s statement, “The fundamentals of the economy are strong.” They are. McCain was right! Innovation is high. Labor productivity is high. There are no shortages of any resource or commodity. Pessimism is driving the downturn, and that pessimism is advanced by relentless media negativism.

Even the Wall Street Journal is spinning events in the most pessimistic light. A page one story declared, “Investors in the U.S. stock market have lost more than $9 trillion since its peak a year ago.” But there is a distinction between a decline and a loss. The paper value of U.S. equities has declined $9 trillion since the peak in October 2007, but many investors have suffered no loss because they haven’t sold. Many people’s houses have declined in value in the last two years, but most people haven’t lost a dime because they haven’t sold — just as many people’s houses rose in value from 2002 to 2006 but most people did not gain, again because they did not sell. Doing nothing can be the smart move in a bear market, and those investors, individual or institutional, who have cleverly done nothing have incurred no losses and are likely to come out ahead in the long run. Yet some insist on claiming $9 trillion has been “lost.” Exaggerating the negative only worsens the economic-confidence picture.