Political Rhetoric and Optimism!

(Disclaimer: My post is also related to the current financial crisis. Either this is a case of great minds thinking alike or we’re all melting into one PPE blob. A formidable blob, of course.)

And so began our reading of Keynes himself!

I wanted to highlight a particular passage from this weekend’s reading. It appears in the very end of “A Programme of Expansion.”

Keynes writes, “Fears and doubts and hypochondriac precautions are keeping us muffled up indoors. But we are not tottering to our graves. We are healthy children. We need the breath of life.”

It’s very beautifully written.  We know from Heilbroner’s biography that Keynes was quite the writer and intermingled with the finest of British poets. I found Keynes to be surprisingly optimistic despite having authored this piece in May of 1929, just a few months before the American stock market crash.  (I know he’s focusing on the British economy, but if I recall correctly, Heilbroner did refer to Keyne’s talent for prediction.)

Keynes places the blame for the sputtering economy not only on the bad policies implemented by Britain’s leadership, but also the general attitude of negativity present in the political rhetoric.  Maybe he was simply voicing his frustration with the politicians of the day, but it could be that Keynes is using his writing talent to fill the "rhetorical" void left behind by the elected officials.  Keynes opens “Programme” with the acknowledgement that his writing will be not complicated enough for the expert and yet too complicated for the layman.  His writing in these few pages was so urgent that it reminded me of a toned down version of the Communist Manifesto. I wondered whether Keynes was writing what he believed that middle demographic needed to hear, so that the economy could get started again.

Keynes seems to be supporting, perhaps inadvertently, the importance of political rhetoric when the economy is in a slump. I find this especially interesting in light of today’s economic situation.  Here's some data from Pew on the public's outlook on the economy in the years since the financial meltdown:

(Source)

 

To say the least, the graph shows that American confidence levels have not been stable, even though it appears to have been getting better at the beginning the 2011. 

I’d venture to say that the economy is the most important issue in the upcoming Presidential election. However, it seems to me that the both of the current candidates are incentivized to convince the general American public that the economy is going the wrong direction -- and that their policy will be its only saving grace.  In a year when voters are voting with their checkbooks, it seems advantageous to use pessimistic tones when talking about the economy.

As always, I tend to ask too many questions, but I have to wonder – has the current political climate helped sustain the current downturn?  I suppose this opens the broader topic of how much influence political rhetoric has on the economy. Does the President have a sort of fiduciary duty, like in a time of war, to ensure Americans feel confident in the American Dream?  Are “[f]ears and doubts and hypochondriac precautions" keeping Americans "muffled up indoors?" Or are the fears entirely warranted?