Michael Barone writes in Townhall.com Obama’s Economists Missed What Voters Plainly Saw.

Barone makes an astute observation that there is a difference between the business cycle recessions more commonly seen in the past and a recession caused by a financial crisis.

In recessions caused by oscillations in the business cycle from the 1940s to 1970s, voters were confident that the private-sector economy could support the burden of countercyclical spending on things like unemployment insurance and public works projects.

That spending would stimulate consumer demand, the thinking went, and once inventories were drawn down, manufacturers would call workers back to the assembly line. The recession would be over.

But a systemic financial crisis is more rare and more severe. The damage is deeper and takes longer to recover.

The very able economists in the incoming Obama administration seem to have ignored the difference between these two kinds of recessions. Council of Economic Advisers head Christina Romer was surely sincere when she promised that passage of the stimulus package would hold unemployment under 8 percent.

Similarly, administration economists evidently thought the private-sector economy could bear the burden of a national debt that doubled over a decade. It would bounce back like it usually does in a business cycle recession.

Tea partiers took a different view — and before long, so did most voters. They seem to believe that permanent increases in government’s share of GDP will inflict permanent damage on the private-sector economy — and won’t do much, if anything, to move us out of this prolonged financial crisis recession. The evidence so far seems to support them.

Economists seem to always be fighting the last recessions like generals fight the last war.  Just as a general knows a guerilla insurgency requires different tactics than uniformed combat, economists must realize the difference in the conditions behind the recession.

Washington, especially under this administration, has been oblivious to the reality of this economy that so many of my small business colleagues see with blinding clarity.

They are applying a treatment to a patient with the wrong diagnosis and cannot understand why the patient’s recovery is taking so long. The common voters, considered so ignorant by the elitist pundits, understand this economy better than the PhDs.

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