Stockman a Pessimist or a Realist?

David Stockman and the cult of gloom | The Edgy Optimist.

After examining the available data, David Stockman believes that the U.S. is caught in an unsustainable economic trap. Rather than examining the facts and figures himself, the Edgy Optimist decides to attack Stockman instead.

Since the author calls himself an optimist, he deems those who do not agree with him pessimists.  In my opinion, optimists and pessimists are two sides of the same coin.  The actual opposite of either is a realist.  In order to be a realist, one must be objective, and this is exceedingly difficult for everybody.  Humans tend towards splitting the world into us and them lending subjective bias to everything.

I began reading this article expecting an array of facts proving that Mr. Stockman was not analyzing the data correctly, but the author merely writes that Stockman is a jeremiad and leaves it at that.  He could have written this same article about those who predicted the subprime crisis before 2007. Those people were labeled as nut-jobs until after the crisis struck.

Those who foretold of the subprime crisis or the coming debt crisis are not doomsayers but realists.  We need to differentiate between doomsayers and realists because people often confuse these two groups.  Doomsayers can be spotted by two distinct features.  They predict the real end of the world, and they give a date for this event.  Realists have the courage to tell the world that bad times are coming, but smart enough to understand that no person can predict the future.

A realist knows that there will be a major earthquake in California.  While it is certain that this event will occur, no one can predict when.  Everyone understands that California is riddled with active geological faults and is earthquake prone as a consequence.  People understand plate tectonics enough so that this is not controversial.

The problem with understanding an economic system in the same way is that how people view the economy is closely tied to their political affiliations.  When one’s party is in power, the economy is doing great.  When it is not, the country is in the midst of another Great Depression.

Because of this dynamic, the author views Stockman’s forecast as a political attack rather than an analysis of the available data.  Now, Stockman’s views are probably colored by his long-term affiliation with the GOP, but that does not mean that they are entirely without merit.

The country is spending much more money than it is earning.  This is unsustainable, so it will stop.  How it will end is subject to debate, but the fact that it will is not.

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