Dear NY Times: Less Misery Than the '70s, '80s

Editor, The New York Times

229 West 43rd St.

New York, NY 10036

To the Editor:

Paul Krugman thinks that that the stimulus package is too small ("The Destructive Center," Feb. 9). He, like many others, portrays today's recession as a major catastrophe that can be controlled only with major interventions.

But the facts do not support the belief that this recession is especially dire. Writing today in a newspaper that is far less sensationalist on this topic than yours – the New York Post – economist Alan Reynolds points out that "With one exception – the steep 45 percent drop in the S&P 500 stock index since October 2007 – few other indicators of economic distress could support this being the worst postwar recession. Thanks to low inflation, for example, real disposable income rose every month during the fourth quarter [of 2008] – at an annual rate above 6 percent."

Mr. Reynolds also notes that, using the late Arthur Okun's "misery index" (which combines inflation with unemployment), today's "misery" is less than 40 percent of its level both in the mid-1970s and in the early 1980s.

Alas, though, insisting that the sky is falling might well bring the heavens crashing down upon us.


Donald J. Boudreaux

Don Boudreaux is the Chairman of the Department of Economics at George Mason University and a Business & Media Institute adviser.