I get the impression that a lot of people in the west fundamentally fail to understand what the purpose of an economy actually is.
An economy is a model for allocating labour and resources in a way that meets the needs of the people in the country.
The original argument for capitalism was that market economy with private ownership is the most effective way to allocate labour and resources in a way that benefits everyone.
Measures such as the stock market and GDP were meant to act as proxies for measuring how well the economy was accomplishing its stated purpose, which is to improve the standard of living for everyone.
Understanding that these metrics are simply proxies has been lost today, and they’ve been turned into goals of themselves. People have started treating the stock market and GDP as the economy.
This is why we’re seeing an increasing disconnect between the economy that people are experiencing in their daily lives and news reporting on how the economy is doing.
And that’s why we see absurd articles like this one arguing that the recession people are experiencing isn’t real.
https://www.wsj.com/economy/it-wont-be-a-recession-it-will-just-feel-like-one-1919267a
As I said, look at the trend. There’s only one major inflection point throughout the entirety of the data, and that’s in 1990, corresponding with the collapse of the USSR.
There’s only one major inflection point throughout the entirety of the data, and that’s in 1990
The inflection is in 1983. '90 is just the first recession of the post-inflection era.
And the full collapse of the eastern block economies doesn’t hit until 1998. The '91 referendum is only the start of the balkinization process.
Again, this is a consequence of the Volcker shock and the boom in export markets from the prior decades.
