2/28/2009

Economy in worst fall since '82

According to the Wall Street Journal, http://online.wsj.com/article/SB123574078772194361.html#articleTabs%3Darticle more recent figure -- which represents the steepest dropoff since the depths of the 1982 recession -- raises pessimism among economists. Until recently, many had been hoping for a rebound in 2009 and now sound downbeat about the remainder of this year. As saying on the video, it would be too soon to say that this is the bottom of the recession. Growth in both Europe and the U.K. fell at an identical 5.9% annual rate. Japan said last week its GDP had contracted more than 12%. The U.S. exports declined at a 24% annual rate, compared with the 20% rate previously reported. This recession is worldwide, so it would be good time to learn other country plan for recession.

9 comments:

Gracie said...

I agree that it would be a good idea to analyze what other countries are planning on doing to better their economies; however,government corruption should also be considered. As discussed in class, a while ago, many governments lie about their actual GDP and other statistical numbers. This could present a problem, if we rely on their info, as we base our policies after other countries actions.

Dr. Tufte said...

-1 on Victoria and Gracie for poor grammar.

I'm going to say something heretical here: looking to the experience of other countries is overrated.

Recessions are very idiosyncratic. Each one is different from the previous one. That's just a platitude, but the fact is that if they were similar enough to each other we'd know more about them and how to combat them. They aren't and we don't ...

So: if you can't learn very much from past recessions in your own country, how much can you learn from recessions in other countries that have different economies, societies, cultures, and governments?

If anything, I think our governments are way to willing other government's policies without any evidence that they actually worked.

Trevor said...

Although it may not be too helpful to look at the experience of other countries and how they have dealt with recession in the past, we must face the fact that we are in a global recession. With that being said, it would be a good idea for rich countries to have the same approach to stopping the recession and expanding the economy. President Obama has asked that all of the G-20 Nations establish their own stimulus bill, to not only help their countries, but to help stimulate international trade. Also, the World Bank president, Robert B. Zoellick asked that each of the G-20 Nations set aside 0.7% of their stimulus packages to help the poor countries that are also being hurt by this global recession. In the midst of the global recession and everyone’s hope of ending, the classic cliché “United we stand, divided we fall” may never be more true.

Jason said...

-1 on Dr. Tufte for not being able to understand the last part of his comment.

I would somewhat disagree with what Dr. Tufte said. I think it is a good idea to study what other countries are doing and the outcome of their decisions. As little as we might learn from those other countries, we could still probably glean a bit from their experiences which might be able to help us in the future. As different as we are, there are still many similarities between countries. I would argue that looking at the effects of policy on a smaller economy might be able to better pinpoint certain economical remedies.

anthony said...

I think looking at other countries could be very helpful in comparing our own GDP. We live in a globalized world, and it's hard to imagine how half the developed countries could improve without the other half following. For instance, if things in the United States improved how could China, Japan, Canada, and Mexico not improve as well, as they account for the majority of our imports?

Anonymous said...

In response to Jason's comment on Dr. Tufte's comment, what has been done by other countries, or our own country for that matter, concerning past recession can be irrelevant because each recession has different causes which require an accompanying different solution. For instants, the recession of 1982 was caused by the lack of liquidity and this recession is a matter of solvency. Each recession will require different remedies. However, constant study of prior recession can be beneficial in the hope to find a solid solution and fix to every recession. But just because one idea or program was successful in a past recession means it will have the same effect for another.

Calvin said...

Looking at other countries will certainly help us see how practically everyone seems to be failing. That's a great way to promote pessimism! The amazing thing to me is how everyone looks at our situation and assumes the worst! So wer're the worst since the 1980's. So what!!! Compared to the great depression we're all living like kings! And now that unemployment is all of the sudden higher than normal, we can just say the countries going to pot?? I don't think so. We've had worse days than this and every single time we've come out of it just fine. Even the people in the 1930's lived to tell. The over exaggeration of all this is what gets to me, and it's usually from the people who aren't even affected!! I say take a bloody chill pill and keep plugging. Things will turn out.

anthony said...

In response to Calvin's comment, there is an article up on MSN's page titled, "U.S. families lost $11 trillion in 2008. If you were part of that group you would likely have a different viewpoint on this recession. Obviously it is not as bad as the Great Depression, but how is that argument supposed to help people feel better? That's like telling people who are starving in Rwanda to stop whining because they're living like kings in comparison to people in Rwanda 300 years ago, because some of them now have access to clean drinking water. The point is, suffering is difficult, no matter how much worse things were 80 years ago. If you lost hundreds of thousands of dollars in retirement funds, lost your house, lost your job, lost your business, etc. you probably wouldn't think this is over exaggerated. I do agree, however, that there are a lot of people complaining about this who haven't been affected at all, but that certainly isn't everyone.

Dr. Tufte said...

Touche Jason. I dropped the word "follow" in there. It should read "If anything, I think our governments are way to willing to follow other government's policies without any evidence that they actually worked."

Your opinion (that it is worthwhile to look at the experience of other countries) is certainly held by the majority. And, on the face of it, I have nothing against it.

But, at a deeper level, I think it is a cop out.

The reason is that we tend to always assume that more information is always better. This is true if we know what we're doing.

But, how does more information help us if we're clueless to start out with? I think in this case it can become a crutch: 1) either you can't act because there might be information out there you haven't collected yet, or 2) you can't think outside the box because you restrict yourself to mimicking behavior you've seen in the information you did collect.

Individuals do this a lot. Committees do it almost constantly. And democracy is government by committee.