A confession: We didn’t set out to produce a special issue on economics. But a few weeks ago we realized that we had in hand a package of stories that, taken together, offer a counterpoint to the woefully inadequate explanations we’ve been given about the economic crash five years ago. Though profits and productivity are up, jobs are still hard to come by and wages have flatlined for millions of Americans. The narratives people have been fed about what it takes to get back on the road to prosperity simply don’t add up.
In his essay “Get Serious,” David Dayen writes that “49 percent of middle-class workers are on track to be ‘poor or near poor’ in retirement.” And yet the political elite in America—obsessed with reining in spending—seems bent on cutting Social Security, the only well-functioning element of America’s retirement system. He chronicles the political blogger Duncan Black’s quest to get policymakers to talk about expanding Social Security. The idea would seem to be political Kryptonite, except that a large majority of Americans (and reams of social science data) support it.
Presidential elections? Intrade bettors got them right when top pundits got them wrong. The next pope? Intrade knew before the white smoke puffed from the Sistine Chapel.
Financial writer Helaine Olen describes, in “The Prophet,” how charismatic personal-finance guru Dave Ramsey exhorts an audience of more than six million Americans to simply stop spending what they don’t have. “Just say no, Ramsey says, to credit cards. No to student loans. No to anything you cannot afford with cash.” Nice ideas. The problem, Olen explains, is that median household income in America fell by seven percent over the last 10 years, while the costs of health care, education, and housing all climbed. Most household debt isn’t the result of some culture-wide lapse in personal responsibility, as Ramsey suggests. It’s the result of major macroeconomic problems.
In the aftermath of the financial crisis, anyone who professed a utopian faith in the rationality of markets was asking to be the butt of jokes. But perhaps the backlash against that faith has gone too far. In “Death at the Summit,” Graeme Wood chronicles the rise and fall of Intrade, a company that gained acclaim allowing people to bet on the future—and showing that the wisdom of the crowds can be freakishly precise. Presidential elections? Intrade bettors got them right when top pundits got them wrong. The next pope? Intrade knew before the white smoke puffed from the Sistine Chapel. Technocrats were delighted with the company’s ability to predict the future, and maybe even reshape society. But regulators drove it out of business.
We also have a story in these pages—“The Vanishing”—about a senseless environmental crime. As one editor pointed out, in a subtle way that story makes the sharpest economic point of all: It is about the madness we commit when we take economic ideology to be more meaningful than the evidence before us.