We meet the two economists outside a gourmet coffee shop where laughably expensive beverage prices have somehow, in contradiction to all known economic theories, failed to reduce the length of the line. It matters not. We're not here for java. We're searching for that very elusive thing known as The Economy.
Everyone has a general notion of what The Economy is. It's American business. It's the gross national product. Wages. The unemployment rate. Housing starts. Durable goods. Not-so-durable goods. It's all these things and many more, mixed together, a seething, frothing brew of human activity, somehow reduced, through the miracle of modern partisanship, into a political issue. The Republicans and Democrats, with their different philosophical eyewear, see radically different economies.
Economists Jared Bernstein, left, and Kevin Hassett agree on a lot of things -- but not on what the economy needs.
(Marvin Joseph -- The Washington Post)
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To sort it out, we called in the experts. Kevin Hassett and Jared Bernstein are your classic Washington economists. They normally spend their time in think tanks (Hassett at the American Enterprise Institute, Bernstein at the Economic Policy Institute -- "Two blocks away in distance, miles away in ideology," notes Bernstein). You've probably heard them on the radio or seen them on TV, mulling the Leading Economic Indicators or the latest incremental change in the unemployment rate.
The conservative Hassett has a rather precocious way of smiling -- it's really almost a sly grin -- as he talks. Perhaps this is because Hassett thinks the economy is in grand shape, humming along nicely.
The liberal Bernstein has worry lines on his forehead. You might argue that he wears a scowl, though he's the friendliest wonk you're ever likely to meet. He's alarmed by what's happening in the economy. Job growth is still too sluggish, and wages -- wages! -- are appalling, coming nowhere close to keeping up with resurgent corporate profits.
They agree on one major concept: that America has a lot of inequality. That boom times for the affluent do not necessarily translate to boom times for the poor. But that's about where their agreement stops.
We're going to drive around town, check the economic scene, meet real people, put our assumptions to the test. We're going to decide if the economy is good or bad. Mostly we will be stuck in traffic.
Gators in the D.C. Swamp
The Economy is not easily pinned down. It's not a single thing.
"It's everywhere," Bernstein says.
His office is just above us, at the corner of L and 17th. Away from his desk, where he keeps his statistics and position papers and charts, he's an unarmed economist, forced to survive on his wits. Bernstein is someone who responds to many questions with a variation of the line, "I've got a graph on that."
He says to Hassett: "You ever have your kid ask you what you do for a living? It's much easier to explain if you're a policeman or a teacher. She definitely understands that I make a lot of graphs."
As they're talking on the sidewalk, the air is suddenly filled with the sound of screeching rubber and crashing steel. A fender bender. A cab has bumped a commuter's sedan. When you're a professional economist you can take such an event and translate it into economic terms.
"That's a productivity killer and a GDP enhancer at the same time," Bernstein says. Sure, the commuter and the cabby and the cabby's passengers will be bollixed up for a while, coping with the traffic mishap, being unproductive, but the accident causes the instant obsolescence of a lot of stuff that must now be replaced -- a radiator, a hood, a side panel. This will drive the Gross Domestic Product forward. Maybe the commuter will go buy an entirely new car.
"Misery makes GDP go up," Hassett says. If you want to stimulate the economy, "a hurricane is excellent," Hassett says. On this midsummer morning it's just a hypothetical, and no one has yet heard of Hurricane Charley.
