Sorry for not posting anything yesterday; it was crazy-ish. It was kind of nice getting pokes from people wondering why I hadn’t posted anything. We might not have a lot of readers here at Some Disagree, but some of you at least are checking regularly to see if there are updates, and I appreciate it.
Unfortunately, today might also be a bit crazy, but I do have more evidence to support my four stated facts from Monday‘s post. This particular graph is very telling, comparing real GDP for the UK, the US, and the Euro zone during the recession. Each of the different economies have been normalized so that value “100” is the GDP in 2003.
One of the problems with evaluating President Obama’s performance in regards to the economy is that it is very difficult to compare it to any other president’s performance, and it is close to impossible to compare it to the counter-factual of “what would have happened if…”
In this chart that I posted on Monday, we can see that the situation facing Obama was indeed worse than any other recession since the Depression. But we can’t adequately evaluate his response compared to the responses of other presidents because each president faced a number of other issues and circumstances, and the nature of each crisis was different.
But this graph of the US, UK, and Euro zone economies for the last 9 years is about as close to an apples-to-apples comparison of policies as you can get. Each economy suffered a large contraction due to the financial meltdown of 2008. Each economy started to recover slowly. These are measures of economies reacting to basically the same set of events.
But there are some very real differences. The US economy didn’t contract quite as much as the UK or greater Euro zone. I, of course, would argue that the Recovery Act signed by President Obama is largely responsible for softening the landing and starting the recovery that we see in that graph. Also, while the UK started to grow again, you can see a leveling off and now another contraction beginning in 2010.
What happened in the UK in 2010? Oh, that’s right. Conservative David Cameron became the Prime Minister and declared that he was going to get the deficits under control, passing austerity measures to help balance their budget. As Paul Krugman wrote yesterday, he was lauded as a Very Serious Person and many conservatives urged President Obama to follow his lead and reduce the deficit at all costs.
Austerity is a disaster, not just for the UK, but for all of Europe. It is exactly what the Mitt Romney and Paul Ryan budget would entail for us and it would crush this very fragile recovery and put us in double dip recession land.