<b>IN’s Cooper:</b> The world is flat — and so is the economy

The Commerce Department says retail sales are going nowhere, while the Labor Department says employment is flat.

The Commerce Department says retail sales are going nowhere, while the Labor Department says employment is flat.
Last Tuesday, the Census Bureau said that 46.2 million people are living below the official poverty line — the highest number in the 52 years the bureau has been tracking the data.
Obviously, the economy stinks. So here’s my prediction: It probably won’t be getting better for a long time, and probably will get worse.
I’ll share my rationale for that outlook in a moment, but if you disagree with it, fine. Just note that my (choose one) cockamamie/brilliant/irrelevant view of the economy is no more valid or invalid than the stuff from “real” experts.
I’ll readily admit that given how much there is to know about the economy, I’m abysmally ignorant. But the older I get, the more I learn that most of the people I assume know a lot about the economy and markets aren’t exactly Einsteins, either. Most “experts,” in fact, have answers that are no better than your grandmother’s.
As a group, I’ve never met a bunch more confident in their convictions than numbers-obsessed economists and their related data gatherers and analyzers in finance. Alchemists may have had a better success rate, but you’ll rarely come across a “cruncher” who will fess up to the fact that what they’re doing is the computerized equivalent of numerology.
At the same time, you’ll never meet a one who will admit that their economic beliefs are as much a secular religion as they are a pseudoscience. The stock market could produce zero returns for the next decade and I’m sure Jeremy Siegel would continue to believe that stocks were for the long run. Lefty economists ignore the fact that spontaneous, “unplanned” solutions often are better than those designed by government experts, while true-believer right-wingers are certain that people will lose all motivation to get wealthier if taxed.
So let the “experts” keep on crunching numbers and predicting that the recovery will continue, albeit feebly.
My view is that we’re in a long, depressing period in which we work off the debt excesses and overinvestment of the past two decades. Construction will continue to limp along because we don’t need new construction — we borrowed up the wazoo for years and overbuilt. Retail sales will limp along because people have no money. And since demand is weak, unemployment will remain high because employers have no reason to hire.
We’re in the same kind of capital slump as we were during the Great Depression, when big public-works projects such as dam building and highway construction were a help but didn’t really reinvigorate the economy. Better times didn’t start until the postwar era, largely because war-mandated savings enabled us to replace outmoded capital stock put in place in the 1910s and 1920s with newer technologies, many of which were developed as a result of military spending.
I have no numbers to back that up, and if you want a forecast for next year’s GDP or the S&P, look elsewhere. But if you’re looking at the real world and don’t see many signs of improvement, I’m with you.