Phil's Gramm of truth

Every couple days or so, the political talking heads like to seize hold of a quote, issue, a political candidate's mistep, etc... and talk it to death. Yesterday there was a fine example of this phenomenon, when the media pounced on the comments made by former Senator Phil Gramm in an interview with the Washington Times. (Phil Gramm is an economic adviser to Senator John McCain's presidential campaign.) In the interview Phil Gramm, who is currently vice-chairman of Swiss Bank UBS, said that the country's economic downturn has been widely exaggerated by the media and even went as far as to call the current U.S. economic troubles a "mental recession". He also said that the nation had "sort of become a nation of whiners".

Pundits from all of the major networks and newspapers jumped at the chance to condemn and criticize Gramm's words. Those on left declared that Gramm, and by extension the McCain Campaign, is "out of touch with the American people and their suffering". McCain, as he has done in past, immediately distanced himself from Gramm's remarks and even seemed to distance himself from Gramm altogether. (One contrast between the two candidates is that Obama is too slow to put out potential political fires, allowing them to fester far too long. While McCain is often times too quick to throw his supporters under the bus when they cause him political headaches at times exacerbating an otherwise minor issue.)

It's not hard to imagine that anyone who is currently suffering economically might find Gramm's words to be offensive. No one likes to be called a whiner. That said, there is some truth to what Gramm had to say. The fact is that we have yet to experience two consecutive quarters of negative economic growth (the definition of a recession). It is also a fact that economic downturns are quite common, happening about every eight to twelve years (on average). Compared to previous periods of slow and/or negative growth, this has been a rather mild downturn. Unemployment is still relatively low, exports are sky rocketing, inflation is rising but still relatively low, etc... In addition, as Gramm notes, alarmist rhetoric about the economy has been extremely common throughout the major media outlets. Certain media outlets have even taken to calling the current downturn a recession even though they know full well that the country has not technically entered a recession. Several articles and opinion pieces appearing in major newspapers and periodicals have even mentioned the word depression to describe where the economy is headed in the not too distant future. So all the denunciations from the political punditry aside, Gramm's analysis was not entirely off the mark.

Nevertheless, Gramm went too far with his "nation of whiners" comment. Gramm's macro economic view of the economy seems to blind him from seeing how this economic downturn affects the daily lives of American's across the economic spectrum. While this downturn (according to certain fundamental economic data) may not be as severe as past economic slowdowns, in terms of the scope of the slowdown, more Americans have been directly impacted by this downturn than in previous ones. Oil prices doubling, food prices exploding, and housing values plummeting, these are things that negatively impact the daily lives of almost every American and they are not being whiners if they express their concern.

So Phil had some legitimate points to make regarding the economy but he didn't do himself or his candidate any favors by attempting to down play the concerns of people all across the country.