I’m tired of disaster porn

…Economic disaster porn, that is: articles full of gloomy statistics and jagged lines all trending downward. In their zeal to repudiate the irrational exuberance of the recent past, many writers seem focused exclusively (and obsessively) on bad news. It’s as if like jilted lovers, they seek to wallow in their grief.

The original of this graphic is said to have appeared in print with the caption “if the decline was fast, the recovery took a considerable time”. Apparently one is supposed to look at it, notice the similarity between the current downturn and the Great Depression, and say “hmmm, we’re in big trouble”.

Others have criticized the graph’s construction: the lack of a label on the y-axis, the arbitrary shifts in the scale of the x-axis. All of that is true, but there’s something even worse going on here. There is no theory behind the idea that “if the decline was fast, the recovery took a considerable time”. It’s just a graph someone put together and published because it looked scary. It’s disaster porn, pure and simple.

I’ve seen crap like this before. In the run-up to the big stock market boom, investment firms mailed out glossy brochures to convince investors that the good times were here to stay. “Sky’s the limit,” they all said. “Can you afford not to invest?” Back then the jagged lines were all trending upward. No way would they ever come back down, or so it seemed. But buried in amongst the hype, these brochures included at least one true statement — a disclaimer, probably put there to satisfy the lawyers: Past performance is not necessarily indicative of future results.

Does the fact that it took 22 years for the economy to come out of the Great Depression have any bearing at all on today’s situation? Who knows. There isn’t an economist alive who understands what’s going on in the current crisis, or who really knows what to do about it. But there’s one thing I’m certain of: by convincing people to ignore financial risks, pretty graphs and simplistic analyses played big a role in creating the mess we’re in. Why should we pay attention to them now?

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