Michael Barone is one of my favorite journalist/talking head/pundit bloggers.   His usually calm analytics, penetrating observation, and common sense pragmatism are a welcome respite from the bombast of those like Rush Limbaugh, Sean Hannity, and Bill O'Reilly, and other talking heads.

In a recent piece published by The Examiner, Barone had some comments to offer on a New York Times piece written by Pulitzer Prize winner David Leonhardt that discussed certain aspects of our economy.  Barone took Mr Leonhardt to task for a factual inaccuracy in the NYT piece that incorrectly claimed President Herbert Hoover reduced government spending at a time of economic crisis.  Barone, citing a blog post  published on The Altantic's website by Megan McArdle demonstrated that this claim was false.  Mr. Barone went on to politely suggest Mr Leonhardt could learn a thing or two from Ms McArdle.  Perhaps Mr. Barone was offering a professional courtesy to Mr. Leonhardt by not taking him to task more directly for his NYT piece, otherwise, I think Mr. Barone sort of missed the larger point while correcting Leonhardt's claim: That ding-dong the consumer economy was a bubble unto itself, it's now dead, and it isn't coming back.  Rubbish.

If there were a literal trash heap of predictions and prognostications by journalists, scholars, and even ordinary folk/bloggers like me, it might reach half-way to our long abandoned Moon.  Mr Leonhardt makes the following declaration:

"The notion that the United States needs to begin moving away from its consumer economy — toward more of an investment and production economy, with rising exports, expanding factories and more good-paying service jobs — has become so commonplace that it’s practically a cliche. It’s also true. And the consumer bust shows why. The old consumer economy is gone, and it’s not coming back.".

A pretty bold proclamation: "It's also true.", without offering a shred of evidence to back up the claim.  And the consumer economy is gone, never to return.  Sometimes, when people receive accolades from lofty organizations, it can go to their heads.

Without diving into research, and going by memory only (a risky gambit as I age and memory isn't what it used to be), the only engineered economies that I am aware of are chiefly Communist.  So when Mr Leonhardt makes the case that the United States needs to engineer it's economy towards producing and "good-paying" service jobs.....and away from consuming, I wonder exactly what he means by that.  As an aside, I am also wondering what Mr. Lionhardt's solution is to competing with slave-labor markets in other goods-producing places around the globe, in order for the US to reclaim production capacity that has gone overseas.

No one can predict the evolutionary, and at times revolutionary dynamics of a free economy.  Aside from perhaps Al Gore, no one saw the Internet coming.  From the early 1990's through today, who among us guessed that the Internet would be the genesis behind the information age, spawning a huge industry.  This is but one example.   The best engineering one can hope for, is no engineering at all: 'Go forth and be creative'.   Yet our increasingly intrusive and all controlling government stifles creativity by laying down regulatory barrier after barrier, and making it ever more increasingly difficult for those creative minds pooling resources and ideas in a garage to come up with something new and novel.   

Declaring the consumer as dead is, frankly, stupid.  How can the U.S. hope to engineer it's economy more towards production if there are no consumers both at home and abroad to sop up it's goods?  What is true is that, as a generalization, American consumers have over-extended themselves, and this pull-back in consumer spending is the ship righting itself, and not merely the beginnings of purification and decay after life initially leaves the organism.   After these great economic struggles are behind us, and they WILL eventually be behind us, there will still be TV's to be bought, the latest electronic gadget to be had, the hot car to cruise in.  On and on.  The much bigger issue here is not consumerism itself, but how consumerism is tied to the average age of the population.  As the post-World War II population bubble bursts, and baby-boomers exit the consuming economy, that spells for trouble all the way around.  And this event - the coming burst of the population bubble - has been a known quantity for a long time now.  Thus, we have bubbles within bubbles.

The American Dream of individual home ownership is also not dead, despite claims otherwise.   The battered economic turbine of all the producers and service providers that support the home owner  may be sputtering, but it too will find it's equilibrium and return to a hum.  Here is a perfect example of the folly of government economic engineering.  When we talk of truisms here, it is a fact that government socio-economic engineering precipitated the now infamous housing bubble.  This, I predict, will one-day, perhaps soon, become the classic classroom case study in how government meddling in the economy can produce disastrous results. 

Another case study in the making is, if unchecked, the coming economic and social fiasco that is Obama's government engineered health care.

Ultimately, in his article, Mr Leonhardt builds his case for why the United States government should raise it's debt ceiling, while not decreasing spending in order to near-term save the teetering economy - in exchange for promising future deficit reductions in order to quell nervous business executives the world over, plus a few other suggestions.  The premise is that if the government stops spending in the middle of an economic crises, the house of cards will collapse.  While there may not be unanimity among economic scholars on the effect of massive government spending during the Great Depression, there is scholarly analysis out there which suggests that massive government spending during the Great Depression actually delayed the recovery, rather than shortened the depression.  Here now we have all witnessed our government pour a trillion borrowed dollars down a "stimulus" rat hole, with negligible positive economic effect, and I wouldn't be surprised if in the fullness of time, it became evident that the orgy of borrow-and-spend actually delayed the inevitable economic recovery.

As Mr. Barone himself points out in another of his blog posts, the Canadian government successfully revived an anemic economy by doing exactly Mr. Leonhardt says is bad - shrinking government.   There is no better time than the present to get started.  The best path toward economic recovery and future prospertiy, is for government to get the hell out of the way.