But unfortunately for President Carter, Gerald Ford’s problem became an even bigger problem for himself as the Misery Index skyrocketed during his tenure at the White House. While the index dropped slightly from 12.66 at the time of Ford’s departure down to 12.60 in Carter’s second year as President, the index reached an all-time high of 21.98 just five months before Carter faced Ronald Reagan in the November 1980 presidential election. Thus, the economic indicator that Carter used to his favor to win the White House ended up being a statistic that helped make the case for his dismissal – and left Carter branded as the “Misery President” among many Americans.
Today, information about the Misery Index is still available (and it’s easy enough to calculate on one’s own), but it receives very little attention in the media. This is probably because many Americans (including myself) understand that, while Okun was correct in surmising that there are social costs incurred when unemployment rates and consumer prices rise all at the same time, there are a lot of other economic factors in addition to unemployment and inflation that can cause “misery.”
For example, the loss of personal net worth brings about a huge “social cost,” and is a major source of anxiety and “misery” in today’s economy. Yet a decline in personal net worth doesn’t even factor in to Okun’s formula.
It may very well be that Oklun never could have imagined that personal net worth would ever become so great for so many individuals, as it did after he had died and prior to the big financial system collapse of 2008. But the dissipation of personal assets has been a big part of the tragic story about the American economy over the past two years, and it has certainly added to the nation’s level of misery.
Another matter that the Misery Index doesn’t contemplate is the impact of “deflation” on individuals, and thus on an entire nation. While dramatic inflation causes real human suffering, especially when it corresponds with rising unemployment, deflation can also hint at a general decline in the value of assets, which correlates with the drop in personal net worth.
And what are we to make of the devaluation of our currency, the skyrocketing national debt, and the fact that every taxpaying American owns over $150,000 of that debt, whether they realize it or not? All these things are creating “misery” for America, and for the world – yet they don’t factor in to Professor Okun’s formula.
Is there any statistic, any “index” that can capture America’s fiscal misery today?
Austin Hill is an Author, Consultant, and Host of "Austin Hill's Big World of Small Business," a syndicated talk show about small business ownership and entrepreneurship. He is Co-Author of the new release "The Virtues Of Capitalism: A Moral Case For Free Markets." , Author of "White House Confidential: The Little Book Of Weird Presidential History," and a frequent guest host for Washington, DC's 105.9 WMAL Talk Radio.
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