How unhappy should we be about the current economy?

I consider that question in my latest Bloomberg column:

When it comes to the economy, Republicans tend to focus on the negative and Democrats on the positive. If the parties were intellectually consistent, it would be the opposite.

Think back to the presidency of George W. Bush. Republicans offered a consistent (albeit debatable) vision of economic success: an “ownership society” where net worth was relatively high, savings were high, and people relied on their own resources to deal with the vicissitudes of the marketplace. With secure property rights and high savings, momentary disturbances could be offset by individual economization. People could manage temporarily higher prices by consuming less or by seeking appropriate substitutes. The initial problem, to the extent there was one, was that not enough households had enough ownership and material resources.

The Bush administration never succeeded into turning the ownership society vision into reality. But fast forward to the present: Quite unintentionally, the pandemic has brought about the ownership society — a distorted and somewhat dystopian version. Household balance sheets have been remarkably strong and liquidity is high, in part because the pandemic reduced spending and in part because of the federal government’s fiscal policy response.

And from the other side:

At the risk of oversimplification, it can be said that the Democratic [economic policy] ideal is one of low prices, with government helping to block or blunt large price increases for household products. Under this ideal, robust household balance sheets are not a priority, as many of the preferred policies would lower savings rates.

You might then think that Democrats would view the current mix of high savings with high and volatile prices as pretty disastrous. Yet the apologists for the current economic situation are more frequently Democrats. Paul Krugman, for instance, has argued repeatedly that there is a huge disconnect between how people portray the economy and how they actually are doing. In essence, he thinks there is too much complaining.

As usual, consistency is hard to come by…