When it comes to recovery, it’s all relative

The most difficult question in any election — but particularly in this election — is “Compared with what?”

For instance: The recovery has been slow and painful compared with what we’d expect following a normal recession. But this wasn’t a normal recession. This was a global financial meltdown. So, when asking whether our economic policymakers have done a good job, we need to ask, compared with what?

For the Romney campaign, the “Compared with what?” test is easy, and the Obama administration failed it. “The historical record is clear,” four economists wrote in a white paper released by the Romney campaign. “Our economy usually recovers quickly from recessions, and the more severe the recession, the faster the subsequent catch-up growth.” The absence of a quick recovery, they went on to argue, shows that “America took a wrong turn in economic policy in the past three years.”

That argument relied mainly on the work of Michael Bordo and Joseph Haubrich, who had shown that the American economy typically recovers swiftly from recessions. But when I contacted Bordo, he didn’t see this case as typical. “We found that a lot of the difference between what would’ve been predicted by the normal behavior of recessions and what we observed now is explained by the collapse of residential investment,” he said. “Put another way, if residential investment were what it was in a normal recovery, we would have recovered already.”

The unquestioned authorities on major financial crises and their lengthy hangovers are Carmen Reinhart and Ken Rogoff, authors of “This Time Is Different,” the key history of the subject. And, in a new paper, they try to set the record straight: “The aftermath of the U.S. financial crisis has been quite typical of post-war systemic financial crises around the globe. If one really wants to focus just on United States systemic financial crises, then the recent recovery looks positively brisk.”

http://www.washingtonpost.com/business/economy/when-it-comes-to-recovery-its-all-relative/2012/10/15/54df7bdc-170a-11e2-a55c-39408fbe6a4b_print.html

Romney's 'binders full of women' goes viral

"I'm not a medical doctor, but I do want to go over some of the symptoms with you because I want to make sure nobody else catches it," he said, revving up. "You know, if you say you're for equal pay for equal work, but you keep refusing to say whether you'd sign a bill that protects equal pay for equal work, you might have Romnesia." Obama continued, "If you say women should have access to contraceptive care, but you support legislation that would let employers deny contraceptive care, you might have a case of Romnesia." People started to get the hang of it at this point.

http://nymag.com/daily/intel/2012/10/barack-obama-diagnoses-romnesia.html

http://www.washingtonpost.com/opinions/romneys-all-wet/2012/10/30/f4b1e572-22dc-11e2-ac85-e669876c6a24_video.html