Jewish World Review Nov. 19, 2001 / 4 Kislev, 5762
During the current war, Americans are told that it is patriotic to crank up consumption -- to go to a mall, a movie and anywhere on a plane. This is the peculiar context in which the president is attempting bifurcated leadership. He must keep the country focused on war far away and involving, so far, few Americans in combat, but the country must also regain its jaunty equilibrium, meaning its money-spending ways.
Washington worries about the trajectory of the public's patience. Worriers warn that patience might be exhausted by hardships at home or casualties abroad. However, the country has an impressive record of sustaining support for high-casualty conflicts.
In two days in Tennessee, at Shiloh, in April 1862, when each side suffered 10,000 casualties, the nation learned that the butcher's bill of the Civil War would be ghastly. Yet the war did not end until three Aprils later. Granted, President Lincoln thought he would lose the 1864 election, and secession would succeed, unless that summer's battles produced victories. The Union may have been saved by Sherman's taking Atlanta. Which proves only that public support for war is sustained by victories.
It is frequently asserted that Vietnam proved that the nation now has a decisively different, softer sensibility -- one shaped by graphic journalism, which gives casualties lacerating immediacy. But public opinion tracked with government policy until that policy became wobbly. Public support for the war did not recede until the elites who had confidently embarked upon escalation lost confidence. Only when it became clear that the nation's leaders did not have the will to win, or did not know how to, did the public say, sensibly, "Enough, already."
If casualties are not apt to erode public support for the war, what about privations? The oddity is that any serious privations, meaning the consequences of a severe and sustained recession, are apt to be self-inflicted, in the sense that the public will be suffering the consequences of its own attitude.
Economists are weighing in for and against various stimulus packages being cobbled together in Congress, but the point of the package is less economics than political psychotherapy. What the country needs is an attitude adjustment -- a confidence infusion. That is something politicians, who are professionals at measuring and messaging public opinion, can do without kibitzing from economists.
So far the economy has been amazingly durable under the buffeting of terrorism on top of a long slide down from market peaks, a slide that began in March 2000. At the close of business Friday, Nov. 9, less than two months after Sept. 11, the Dow average was slightly higher than it was at the close of business Sept. 10.
But Alan Greenspan is almost out of the game, his leverage largely exhausted by 10 interest rate cuts this year. Now Congress is looking for ways to put money into people's pockets, but without much confidence that the money will be quickly taken out of those pockets and start coursing through the economy, having multiplier effects. Sensible people will be inclined to save for a rainy day as long as the economy is shedding jobs. Which it is apt to do until people feel less anxious.
Discounting, including discounted financing, produced a 7.1 percent surge in retail sales from September's depressed level, the biggest one-month gain ever recorded. Almost all of this came from zero-percent financing for automobiles, which produced a stunning 26.4 percent increase in car sales. But such financing is terribly expensive for the manufacturers and no substitute for strong, steady, broad consumer demand.
Perhaps that can be encouraged by events in Congress and Afghanistan. Congress will pass some sort of "stimulus" in the hope that it will somehow make Americans feel better. So will the flight of the Taliban regime, which threatens to replace irrational pessimism with irrational exuberance about the military solution to terrorism. Such is the fecundity of