economics and confidence
Oct. 23rd, 2026 10:13 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
hudebnikJust read this opinion piece in the Times, two economics reporters talking about the current state of the US economy, consumer confidence, and how politicians try to address economic problems. They point out that the strategies most likely to Actually Work tend to be boring and long-term, not the sorts of things that get you elected or even re-elected, so politicians are tempted into promising the people ponies and rainbows that they can't deliver, so they get thrown out at the next election and replaced by politicians of the opposite major party with similar unfulfillable promises, and the people come to conclude that both parties are either incompetent or crooked. Which all makes sense.
But I want to examine a different part of their discussion. The University of Michigan has been running consumer-confidence surveys for decades, so they've built up credibility and a solid historical record. And overall consumer confidence in the state of the economy is about as low as it's ever been -- lower than in the depths of COVID, lower than in the depths of the 2008-2009 recession. Which is sorta puzzling: most of the objective measures of the economy are better than they were in those crises, so why are people so gloomy about the economy? Unemployment is historically low, lower than it's been for much of my (60-some-year) life. Inflation is higher than before COVID, but still lower than it's been for much of my life. What are people complaining about?
The reporters toss around a couple of possible answers. Inflation in the past four years has been higher than people under the age of forty have ever seen, so they're facing it for the first time. Maybe people aren't comparing the economy with what it was but with what Trump promised them it would become. And of course tariffs, the Iran war, budget deficits, and corruption are all self-imposed taxes.
I'm personally doing OK in the economy: it's been a long time since I refrained from buying something because I couldn't afford it. (I'm in the top 5% of the US income curve -- rich enough that a Republican tax cut might help me more than it hurts me, but not in the long tail that's gotten immensely richer in the past few decades.) But I feel gloomy about the overall economy too, and not for the above reasons.
For most of the past eighty years, the United States had allies around the world, and was primus inter pares in a rule-based international order that mostly prevented both direct great-powers conflicts and wars of territorial conquest. Sure, we didn't always obey our own rules, but we usually did, and our allies usually did, and the result was often good for all sides. Democracy and freedom worked pretty well, and were gaining ground around the world, with our support. The free market was winning everywhere, even making inroads in formerly-Communist places like Russia and China, and American companies were some of the most successful, largely (though not entirely) the way Adam Smith would have wanted it -- by producing high-quality goods and services at low prices. Sometimes the government put a thumb on the scales in favor of American companies, but it was a light thumb. Each generation of Americans was noticeably better-off than its parents. The US dollar was the world's currency of choice, both for long-term reserves and for settling international trades.
The US military was the best in the world; we would have to work hard to beat Russia or (more recently) China in a direct conflict, but against any lesser foe we would easily win. Our diplomats, spies, and foreign aid were in every country in the world, providing the expertise, intelligence, and goodwill to avoid having to go to war. The US justice system was scrupulously insulated from political influence, and routinely prosecuted opponents and supporters of the current administration alike; Bill Clinton got in hot water for having a brief one-on-one conversation with the Attorney General on the tarmac at an airport. Most of the Federal government was a strictly meritocratic, and fairly competent, civil service, in which your politics were expected to be left at the door. The Federal government supported academic and corporate research, again in a strictly meritocratic way in which non-political officials made funding decisions based on input from peer-review committees. Business-owners really like operating in a nation in which the laws are written down, and enforced in predictable ways, so American and foreign companies alike set up shop in the US (albeit not for labor-intensive things, which they could do cheaper in China or India). Parents from every country on earth dreamed of sending a child to college or graduate school in the US. And of course the fairness and honesty of our elections, while never perfect, was a national point of pride, something people in third-world countries dreamed of achieving.
As of late 2026, all of that is gone. Some of it was whittled away during the first Trump administration, but the second has kicked into high gear, selling off decades of American credibility in two years to enrich the President, his family, and a few of his already-rich advisors. The US has alienated most of its traditional democratic allies and openly allied itself with authoritarian and totalitarian governments. The US has (more openly and baldly than before) declared itself un-bound by international law, un-bound by free-trade agreements it has signed, un-bound by anything not in its own (meaning the President's) short-term interest. Rather than supporting the spread of freedom and democracy around the world, the Trump administration prefers to divide the world among the US, Russia, and China, with each country completely dominating other countries in its sphere of influence, like Mafia bosses dividing up territory without bothering to ask the people living there. Nations that used to depend on the US for military protection, trade, investment opportunities, education, and enforcement of international laws and norms have learned that they can't trust us; they need to fend for themselves or form new alliances that don't include the US or the US dollar. The White House openly welcomes bribery and flattery, so the way for a company to succeed is no longer to produce better goods and services at better prices, but to bribe and flatter the right people in exchange for favorable government treatment. Indeed, that government has now taken substantial ownership or revenue-sharing stakes in at least forty major companies (sounds Communist to me!), which get favorable treatment not available to their competitors who may do better work but aren't allied with the right government officials. Insider trading on government action is not only commonplace but at the core of the President's personal business model.
The US military, led by a Secretary more concerned with muscles, clean jaw-lines, and dom/sub play-acting than with expertise, strategy, morality, legality, professionalism, or competence, started a war eight months ago with no consultation with Congress, no justification to the American people, no allies, no clear goals, and no contingency plans in case Iran didn't immediately roll over and surrender, and Iran has conclusively beaten us in every way that matters. Unable to beat a mid-sized adversary, the military has turned to blowing unarmed fishing boats out of the water to prove its manliness. The State Department has shut down both diplomacy and foreign aid to many countries that don't interest the President, and actively promotes authoritarian leaders abroad if Trump personally likes them. The Department of Justice, like nearly every other executive department, has been explicitly converted into a partisan tool for revenge against President Trump's enemies. Military flag officers and DOJ prosecutors who, during prior administrations, followed orders and did their jobs in ways that, years later, President Trump doesn't like, have been fired and even criminally prosecuted for it. People who have ever voted Democratic or donated to Democratic candidates are ineligible for promotion. At the same time, any law-breaking is forgivable if it benefits President Trump, or if you bribe or flatter President Trump enough, or if it's a law President Trump has himself broken. Most of the upper echelons of the Executive Branch are led by people with no qualifications for the job except TV-star looks or slavish personal loyalty to the President; many are his former defense attorneys. Major law firms, media companies, and universities, threatened with punishment on no legal or meritocratic basis, have kowtowed to the President and changed their policies to match his personal preferences rather than the law. The administration's hostility to foreigners has cost universities vast numbers of foreign students and faculty, with their associated revenue, research skills, and international recognition. And the Trump administration, after having failed in several attempts to steal the 2020 election, has installed partisan loyalists to oversee elections in many states, and has resolved to take every opportunity to control the outcome of future elections so it can continue grifting, extorting, and giving jobs to its unqualified supporters. No third-world country envies us that; they're all too familiar with it.
In short, my sense over the past year and a half is that, for the first time in my life, the United States is no longer a good investment. It's no longer a rising or dominant power, but one that will never regain the respect and influence it had in the late 20th century; its best days are behind it.
But I want to examine a different part of their discussion. The University of Michigan has been running consumer-confidence surveys for decades, so they've built up credibility and a solid historical record. And overall consumer confidence in the state of the economy is about as low as it's ever been -- lower than in the depths of COVID, lower than in the depths of the 2008-2009 recession. Which is sorta puzzling: most of the objective measures of the economy are better than they were in those crises, so why are people so gloomy about the economy? Unemployment is historically low, lower than it's been for much of my (60-some-year) life. Inflation is higher than before COVID, but still lower than it's been for much of my life. What are people complaining about?
The reporters toss around a couple of possible answers. Inflation in the past four years has been higher than people under the age of forty have ever seen, so they're facing it for the first time. Maybe people aren't comparing the economy with what it was but with what Trump promised them it would become. And of course tariffs, the Iran war, budget deficits, and corruption are all self-imposed taxes.
I'm personally doing OK in the economy: it's been a long time since I refrained from buying something because I couldn't afford it. (I'm in the top 5% of the US income curve -- rich enough that a Republican tax cut might help me more than it hurts me, but not in the long tail that's gotten immensely richer in the past few decades.) But I feel gloomy about the overall economy too, and not for the above reasons.
For most of the past eighty years, the United States had allies around the world, and was primus inter pares in a rule-based international order that mostly prevented both direct great-powers conflicts and wars of territorial conquest. Sure, we didn't always obey our own rules, but we usually did, and our allies usually did, and the result was often good for all sides. Democracy and freedom worked pretty well, and were gaining ground around the world, with our support. The free market was winning everywhere, even making inroads in formerly-Communist places like Russia and China, and American companies were some of the most successful, largely (though not entirely) the way Adam Smith would have wanted it -- by producing high-quality goods and services at low prices. Sometimes the government put a thumb on the scales in favor of American companies, but it was a light thumb. Each generation of Americans was noticeably better-off than its parents. The US dollar was the world's currency of choice, both for long-term reserves and for settling international trades.
The US military was the best in the world; we would have to work hard to beat Russia or (more recently) China in a direct conflict, but against any lesser foe we would easily win. Our diplomats, spies, and foreign aid were in every country in the world, providing the expertise, intelligence, and goodwill to avoid having to go to war. The US justice system was scrupulously insulated from political influence, and routinely prosecuted opponents and supporters of the current administration alike; Bill Clinton got in hot water for having a brief one-on-one conversation with the Attorney General on the tarmac at an airport. Most of the Federal government was a strictly meritocratic, and fairly competent, civil service, in which your politics were expected to be left at the door. The Federal government supported academic and corporate research, again in a strictly meritocratic way in which non-political officials made funding decisions based on input from peer-review committees. Business-owners really like operating in a nation in which the laws are written down, and enforced in predictable ways, so American and foreign companies alike set up shop in the US (albeit not for labor-intensive things, which they could do cheaper in China or India). Parents from every country on earth dreamed of sending a child to college or graduate school in the US. And of course the fairness and honesty of our elections, while never perfect, was a national point of pride, something people in third-world countries dreamed of achieving.
As of late 2026, all of that is gone. Some of it was whittled away during the first Trump administration, but the second has kicked into high gear, selling off decades of American credibility in two years to enrich the President, his family, and a few of his already-rich advisors. The US has alienated most of its traditional democratic allies and openly allied itself with authoritarian and totalitarian governments. The US has (more openly and baldly than before) declared itself un-bound by international law, un-bound by free-trade agreements it has signed, un-bound by anything not in its own (meaning the President's) short-term interest. Rather than supporting the spread of freedom and democracy around the world, the Trump administration prefers to divide the world among the US, Russia, and China, with each country completely dominating other countries in its sphere of influence, like Mafia bosses dividing up territory without bothering to ask the people living there. Nations that used to depend on the US for military protection, trade, investment opportunities, education, and enforcement of international laws and norms have learned that they can't trust us; they need to fend for themselves or form new alliances that don't include the US or the US dollar. The White House openly welcomes bribery and flattery, so the way for a company to succeed is no longer to produce better goods and services at better prices, but to bribe and flatter the right people in exchange for favorable government treatment. Indeed, that government has now taken substantial ownership or revenue-sharing stakes in at least forty major companies (sounds Communist to me!), which get favorable treatment not available to their competitors who may do better work but aren't allied with the right government officials. Insider trading on government action is not only commonplace but at the core of the President's personal business model.
The US military, led by a Secretary more concerned with muscles, clean jaw-lines, and dom/sub play-acting than with expertise, strategy, morality, legality, professionalism, or competence, started a war eight months ago with no consultation with Congress, no justification to the American people, no allies, no clear goals, and no contingency plans in case Iran didn't immediately roll over and surrender, and Iran has conclusively beaten us in every way that matters. Unable to beat a mid-sized adversary, the military has turned to blowing unarmed fishing boats out of the water to prove its manliness. The State Department has shut down both diplomacy and foreign aid to many countries that don't interest the President, and actively promotes authoritarian leaders abroad if Trump personally likes them. The Department of Justice, like nearly every other executive department, has been explicitly converted into a partisan tool for revenge against President Trump's enemies. Military flag officers and DOJ prosecutors who, during prior administrations, followed orders and did their jobs in ways that, years later, President Trump doesn't like, have been fired and even criminally prosecuted for it. People who have ever voted Democratic or donated to Democratic candidates are ineligible for promotion. At the same time, any law-breaking is forgivable if it benefits President Trump, or if you bribe or flatter President Trump enough, or if it's a law President Trump has himself broken. Most of the upper echelons of the Executive Branch are led by people with no qualifications for the job except TV-star looks or slavish personal loyalty to the President; many are his former defense attorneys. Major law firms, media companies, and universities, threatened with punishment on no legal or meritocratic basis, have kowtowed to the President and changed their policies to match his personal preferences rather than the law. The administration's hostility to foreigners has cost universities vast numbers of foreign students and faculty, with their associated revenue, research skills, and international recognition. And the Trump administration, after having failed in several attempts to steal the 2020 election, has installed partisan loyalists to oversee elections in many states, and has resolved to take every opportunity to control the outcome of future elections so it can continue grifting, extorting, and giving jobs to its unqualified supporters. No third-world country envies us that; they're all too familiar with it.
In short, my sense over the past year and a half is that, for the first time in my life, the United States is no longer a good investment. It's no longer a rising or dominant power, but one that will never regain the respect and influence it had in the late 20th century; its best days are behind it.
