"In The Long Run…"
Will Wilkinson posts the following interesting chart highlighting the remarkable long-term consistency of the growth trend in US per capita income:
Even something as cataclysmic at the Great Depression doesn’t fundamentally alter the equation. On the other hand, it did take fully fifteen years for incomes to return to where they were before things fell off the cliff and that’d be an awful long time to wait for “the long run.” In a gloomy mood, I recall the lesson of The Black Swan, namely that our habit of regarding the Great Depression as a worst case scenario is really nothing more than a convention. It was very bad, and substantially worse than any other modern downturns. Ergo, we use it as a baseline of how bad things could get in the economy. But for all we know, things could get much worse.
One assumes that probably they won’t. That, indeed, they probably won’t get anywhere near as bad. But it could have been the case that over the past two weeks I more-and-more got the sense that policymakers had a handle on the problems and were working to address them. Instead, day-after-day the reverse seems to be the case.