Month: April 2010

The Mega-Depression

In the preceding post, I offered my definition of recession and asked whether the current one has ended. (The answer: not yet, but I may know soon — or sooner than the official score-keepers at the National Bureau of Economic Research.) It since occurred that to focus on the current recession — or any recession — is to ignore America’s mega-depression, which is now more than a century old.

As I explain here, the mega-depression began in the early 1900s, when the economy began to sag under the weight of “progressivism” (e.g., trust-busting, regulation, the income tax, the Fed). Then came the New Deal, whose interventions provoked and prolonged the Great Depression (see, for example, this, and this). From the New Deal and the Great Society arose the massive anti-market/initiative-draining/dependency-promoting schemes known as Social Security, Medicare, and Medicaid. The extension and expansion of those and other intrusive government programs has continued unto the present day (e.g., Obamacare), with the result that our lives and livelihoods are hemmed in by mountains of regulatory restrictions.

The mega-depression is an example of  “that which is not seen,” a coinage of Frédéric Bastiat. In “That Which Is Seen and That Which Is Not Seen,” Bastiat writes:

Have you ever chanced to hear it said “There is no better investment than taxes. Only see what a number of families it maintains, and consider how it reacts on industry; it is an inexhaustible stream, it is life itself.” . . .

The advantages which officials advocate are those which are seen. The benefit which accrues to the providers is still that which is seen. This blinds all eyes.

But the disadvantages which the tax-payers have to get rid of are those which are not seen. And the injury which results from it to the providers, is still that which is not seen, although this ought to be self-evident.

When an official spends for his own profit an extra hundred sous, it implies that a tax-payer spends for his profit a hundred sous less. But the expense of the official is seen, because the act is performed, while that of the tax-payer is not seen, because, alas! he is prevented from performing it.

In the case of aggregate economic activity, what we see is what has been left to us by government. What we do not see is the extent to which the money taken from us by government and the restrictions placed upon us by government have deprived the economy of entrepreneurship, innovation, technology, and productive capacity. The cumulative effect of those deprivations — that which we do not see — dwarfs the Great Depression in depth and extent. The cumulative effect is our mega-depression:

Is the Recession Over?

The National Bureau of Economic Research (NBER) has not yet declared an end to the recession. But no matter . . . according to the NBER, a recession ends when the economy has stopped contracting and begun expanding. In other words, the NBER could (and has) declared the end of a recession when the rate of aggregate economic activity (as measured by constant-dollar GDP) remains below its level at the beginning of the recession. That anomaly leads me to the following definition:

  • two or more consecutive quarters in which real GDP (annualized) is below real GDP (annualized) for an earlier quarter, during which
  • the annual (year-over-year) change in real GDP is negative, in at least one quarter.

That is to say, a recession lasts as long as there is a real and sustained dip in economic activity.

Here is my take on postwar recessions, which are marked by the vertical bars (click image to enlarge it):

Contrary to the NBER, there were no recessions in 1969-1970 or 2001. The Reagan-Volcker boom — which began in 1983 and was interrupted by the very mild recession of 1990-1991 — lasted until 2008.

To answer the title question: I don’t know if the recession is over, but I will know as soon as the Bureau of Economic Analysis releases its GDP estimate for the first quarter of 2010. Or, you can wait until the NBER makes its call in 2011.

The Shape of the Supreme Court

UPDATED 08/09/10

With the replacement of Justice John Paul Stevens by Elena Kagan, the Court’s presidential provenance looks like this*:

Reagan — Antonin Scalia (1986), Anthony Kennedy (1988)

Bush I — Clarence Thomas (1991)

Clinton — Ruth Bader Ginsburg (1993), Stephen Breyer (1994)

Bush II — John Roberts (2005), Samuel Alito (2006)

Obama — Sonia Sotomayor (2009), Elena Kagan (2010)

In terms of age, the Court looks like this:

Ginsburg, 77

Scalia, 74

Kennedy, 73

Breyer, 71

Thomas, 61

Alito, 60

Sotomayor, 55

Roberts, 55

Kagan, 50

Barring an unexpected death or retirement, Ginsburg will be the next to go. Like Souter and Stevens, she is likely to retire on Obama’s watch, in an effort to maintan the Court’s present ideological balance. Obama’s picks have not, and likely will not, alter the Court’s ideological balance, but they will create a core of youngish “liberal” justices, who will serve for decades.

The best that we devoted adherents of the Constitution can hope for is a one-term Obama-cy and a Republican successor who will do a better job of selecting justices than Ford (Stevens), Reagan (O’Connor and Kennedy), and G.H.W. Bush (Souter). In fact, the election of a Republican is critical because the person who sits in the White House from 2013 to 2017 or 2021 may well have to replace three justices — most likely Scalia, Kennedy, and Breyer.

Imagine the future of the Court if those three justices — an eccentric originalist, a wavering centrist, and a semi-hard leftist — could be replaced with sober, collegial originalists. They would outnumber Kagan, Sotomayor, and the next Ginsburg by 6-3, setting the stage for an era of constitutional resurgence.

__________

* For those of you who are interested in the Court’s genealogy, the following lines of succession have led to the present Court (* = elevated from associate justice to chief justice):

Chief Justice
John Jay (1789-1795)
John Rutledge* (1795-1795)
Oliver Ellsworth (1796-1800)
John Marshall (1801-1835)
Roger Brooke Taney (1836-1864)
Salmon Portland Chase (1864-1873)
Morrison Remick Waite (1874-1888)
Melville Weston Fuller (1888-1910)
Edward Douglass White* (1910-1921)
William Howard Taft (1921-1930)
Charles Evans Hughes* (1930-1941)
Harlan Fiske Stone* (1941-1946)
Fred Moore Vinson (1946-1953)
Earl Warren (1954-1969)
Warren Earl Burger (1969-1986)
William Hubbs Rehnquist* (1986-2005)
John Glover Roberts Jr. (2005-)

Associate-1
James Wilson (1789-1798)
Bushrod Washington (1799-1829)
Henry Baldwin (1830-1844)
Robert Cooper Grier (1846-1870)
William Strong (1870-1880)
William Burnham Woods (1881-1887)
Lucius Quintus C. Lamar (1888-1893)
Howell Edmunds Jackson (1893-1895)
Rufus Wheeler Peckham (1895-1899)
Horace Harmon Lurton (1910-1914)
James Clark McReynolds (1914-1941)
James Francis Byrnes (1941-1942)
Wiley Blount Rutledge (1943-1949)
Sherman Minton (1949-1956)
William Joseph Brennan Jr. (1957-1990)
David Hackett Souter (1990-2009)
Sonia Maria Sotomayor (2009-)

Associate-2
William Cushing (1790-1810)
Joseph Story (1812-1845)
Levi Woodbury (1846-1851)
Benjamin Robbins Curtis (1851-1857)
Nathan Clifford (1858-1881)
Horace Gray (1882-1902)
Oliver Wendell Holmes Jr. (1902-1932)
Benjamin Nathan Cardozo (1932-1938)
Felix Frankfurter (1939-1962)
Arthur Joseph Goldberg (1962-1965)
Abraham Fortas (1965-1969)
Harry Andrew Blackmun (1970-1994)
Stephen Gerald Breyer (1994-)

Associate-3
John Blair (1790-1795)
Samuel Chase (1796-1811)
Gabriel Duvall (1811-1835)
Philip Pendleton Barbour (1836-1841)
Peter Vivian Daniel (1842-1860)
Samuel Freeman Miller (1862-1890)
Henry Billings Brown (1891-1906)
William Henry Moody (1906-1910)
Willis Van Devanter (1911-1937)
Hugo Lafayette Black (1937-1971)
Lewis Franklin Powell Jr. (1972-1987)
Anthony McLeod Kennedy (1988-)

Associate-4
John Rutledge* (1790-1791)
Thomas Johnson (1792-1793)
William Patterson (1793-1806)
Brockholst Livingston (1807-1823)
Smith Thompson (1824-1843)
Samuel Nelson (1845-1872)
Ward Hunt (1873-1882)
Samuel Blatchford (1882-1893)
Edward Douglass White* (1894-1910)
Joseph Rucker Lamar (1911-1916)
Louis Dembitz Brandeis (1916-1939)
William Orville Douglas (1939-1975)
John Paul Stevens (1975-2010)
Elena Kagan (2010-)

Associate-5
James Iredell (1790-1799)
Alfred Moore (1800-1804)
William Johnson (1804-1834
James Moore Wayne (1835-1867)

Associate-6
Thomas Todd (1807-1826)
Robert Trimble (1826-1828)
John McLane (1830-1861)
Noah Hayes Swayne (1862-1881)
Stanely Matthews (1881-1889)
David Josiah Brewer (1890-1910)
Charles Evans Hughes* (1910-1916)
John Hessin Clarke (1916-1922)
George Sutherland (1922-1938)
Stanley Forman Reed (1938-1957)
Charles Evans Whitaker (1952-1962)
Byron Raymond White (1962-1993)
Ruth Bader Ginsburg (1993-)

Associate-7
John Carlton (1837-1865)

Associate-8
John McKinley (1838-1852)
John Archibald Campbell (1853-1861)
David Davis (1862-1877)
John Marshall Harlan (1877-1911)
Mahlon Pitney (1912-1922)
Edward Terry Sanford (1923-1930)
Owen Josephus Robert (1930-1945)
Harold Hitz Burton (1945-1958)
Potter Stewart (1959-1981)
Sandra Day O’Connor (1981-2006)
Samuel Anthony Alito Jr. (2006-)

Associate-9
Stephen Johnson Field (1863-1897)
Joseph McKenna (1898-1925)
Harlan Fiske Stone* (1925-1941)
Robert Houghwout Jackson (1941-1954)
John Marshall Harlan II (1955-1971)
William Hubbs Rehnquist* (1972-1986)
Antonin Gregory Scalia (1986-)

Associate-10
Joseph P. Bradley (1870-1892)
George Shiras Jr. (1892-1903)
William Rufus Day (1903-1922)
Pierce Butler (1923-1939)
William Francis Murphy (1940-1949)
Thomas Campbell Clark (1949-1967)
Thurgood Marshall (1967-1991)
Clarence Thomas (1991-)

Sources: Appendix Two, “Nominations and Successions of the Justices,” The Oxford Guide to United States Supreme Court Decisions, edited by Kermit L. Hall, Oxford University Press, 1999; “Members of the Supreme Court of the United States,” from the website of the U.S. Supreme Court.

A Declaration of Independence, Updated

If you haven’t read “A Declaration of Independence,” or haven’t read it since I revised it, I recommend a first or second look.