A bit of Monday morning cheer, by way of a reminder that bad news often has a bright side.
» House prices are falling: True, but if you bought your home long ago, or even only a few years ago, you are still wealthier than you were then, even without counting the approximate 8 percent gain in your 401(k) this year. And if you have been wanting to buy a home, but have been priced out of the market, that market is coming back to you.
» The dollar is falling: True, which means that if you are planning to take an overseas vacation this summer, it will cost you a bit more — especially in London, where it takes more than $2 to buy 1 pound. That means that if you and the kids drop into a Pizza Express for four small (and I mean small) pizzas “American”, plus a couple of beers and two Cokes, you will be out more than $80. But the silver lining is that made-in-the-USA goods are now cheaper for foreigners to buy, and our hotels and restaurants are bargains for them — which has produced a boom in tourism in Washington, New York and other cities.
» The globe is warming: This may or may not be true, but if it is, take heart. There will be winners as well as losers. Shipping time between our Atlantic and Pacific coasts will plummet as lanes open through the melting Arctic, alternative energy firms will prosper, agriculture in Russia and Canada will boom, and maple syrup is already flowing in upstate New York in January, according to The Economist. Think of delightful winters on the beach at Ocean City.
» The rich are getting richer: True, but that is not a problem so long as the money is fairly earned and equitably taxed. And the most visible of the new rich, the private equity deal-makers, meet the first criterion: they are performing a real service by taking over badly run companies, whipping them into shape, and returning them to the public markets.
But it is not clear thattaxing a large portion of the earnings from these ventures at relatively low capital gains rates passes anyone’s equity test. Again, there is good news: in some countries there would be challenges to the entire economic system by the disgruntled masses, here in America there will be careful consideration by a democratically elected congress, balancing the need for greater equity against the desire not to dilute the incentive to efficient corporate restructuring.
» Airlines and airports are overcrowded: True, and travel this summer will be a nightmare of overbookings and delays. But remember, this is true only because deregulation makes it possible for so many people to afford air travel, a mode once reserved for the affluent.
» One billion dollars is being spent on political campaigns, and that’s too much: It is true that the multiple candidates will spend about $1 billion in the two years between the campaigns’ start and the time we go to the polls in November 2008. But the good news is we are a rich country. As George Will has pointed out, in those two years we will spend the same amount on Easter candy.
The better news is we can use our remotes to switch off any political ads we don’t want to see. The one bit of news for which there is no silver lining is that our laws are structured so that an under-qualified billionaire such as New York Mayor Mike Bloomberg can consider running for president, but a superbly qualified non-billionaire independent faces the almost impossible chore of raising money in the small amounts permitted by law.
» The government is incompetent: The government cannot control our borders or develop a policy to reduce our dependence on foreign oil or figure out how to save the middle class from the depredation of a tax — the Alternative Minimum Tax (AMT) — ” originally aimed at millionaires only. Sorry, no silver lining to this dark cloud.
So live with that particular problem we must. Most other bad news is really not as worrying as it at first seems. Have a good week.
Irwin Stelzer is the director of economic policy studies at The Hudson Institute
