The role of narrative in the rise and fall of the economy (update)

About five months ago, a couple of weeks after what now looks like the “market bottom,” I wrote a blog post titled, ” The recession may not be over, but the recession narrative seems to be recovering. In it, I wrote that one of the narrative shifts would be a focus on the role of “psychology” in the economy and less focus on rational-sounding reasons you hear from typical Monday-morning musings of economists.

In that post, I wrote the following:

The new narrative will suggest that more than “credit swaps,” the “crash” was caused by our leaders scaring the beejeezes out of us and we all responded like people who have the beejeezes scared out of them should rationally respond — we started hiding in the basement instead of shopping. As I blogged the other day, prepare to read a lot about Robert Shiller, who will be described as “one of the only economists who actually ‘called’ the current economic meltdown.”

Well, here we are, five months later and the stock market has risen over 30% since March.

And today, Professor Shiller has a long piece in the New York Times explaining how an echo-chamber of economists and the reporters (who write whatever the economists say) has turned the term “green-shoots” into a new economic feed-back loop narrative that has become a self-fulfilling prophecy.

So what does the future hold?

Unfortunately, Professor Shiller doesn’t tell us, as even he falls back on the clichéd crutch of all economists: “The other hand.”

He writes in the last two sentences:

“All of this suggests that a social epidemic is supporting renewed confidence. This confidence can keep growing by contagion, as a kind of self-fulfilling prophecy, and we may see the markets and the economy recover further. But in an economy that is still unstable, the stories could also morph into different forms, the price feedback could turn downward and the dynamic could turn ugly again — just as it has in the past.

Translation: “On one hand, the economy can grow, on the other hand, it could turn downward.”

Heck, I get better insight than that from Chauncey Gardener.

Remembering Katrina: And thoughts on why Twitter is not a blog shrunk down to “micro-” size

I can’t go through these few days each year without thinking back to 2005 and how I anticipated Katrina approaching the gulf coast leading up to August 29 and then gradually realized the severity of what was taking place. By reviewing my blog posts, I can see that even I did not understand how bad things were until late on the 30th or early on September 1. By September 2, I was doing all I could to point to Nashvillians and web-based efforts responding to the human needs caused by the aftermath of Katrina.

As Katrina is now seared into our consciousness as being one of the worst natural disasters in American history, it is helpful to me to glance through my posts over those few days — as I used this blog more as “a diary” then than perhaps at any other time over the past nine years. I can see how I (and collectively, “we”) went from being concerned to “shocked” at what was taking place.

For example, it was not until September 3, that I wrote a a short post called “Sinking in”:

Perhaps symbolic of the collective delay in responding to Katrina has been how has responded. Universally praised for turning over its front page to tsunami relief almost immediately, did not add a donation link of any size (noted by Jason Kottke) to its front page until three days after the hurricane. Today, six days after, the dominant position of the front page is finally devoted to Katrina relief. This is not a criticism of Amazon’s response, rather a curious observation of how there was an apparent initial disbelief by lots of people that an unprecedented tragedy of historic proportions was unfolding. (I’ll reserve my criticism for Apple, who has hyped the Mighty Mouse in the dominant position all week.)

Having a blog can help me recall how my colleagues and I at Hammock, on September 14, adopted a magazine in New Orleans called Louisiana Cookin’ after learning their staff had been evacuated to places all over the country. Our assistance was more technical and “holding hands” and becoming friends than anything, but it lasted a few issues and I’m happy to see the magazine is still being published today (and I just renewed my subscription).

Because I have a blog, I can review and recall the impact on me and my then 15-year-old son (and photos) of spending a couple of days working in coastal Mississippi with a volunteer group from our church six months after Katrina. And then, almost a year after the storm and aftermath, how he and I travelled to New Orleans to finally meet our new Louisiana Cookin’ friends and join them in celebrating some outstanding young chefs who were (and still are) committed to continue making the region home to some of the most wonderful food in America.

Because I blog, I can look back and read at how that trip both made me realize a part of New Orleans will likely never return, while marveling how another part of it came back to life almost immediately:

While an incomprehensibly broad swath of neighborhoods are still struggling through the very earliest stages of coming back to life, and may never recover fully, — and these range from inner-city to affluent neighborhoods — such a tourist-iconic spot as Jackson Square was stunningly beautiful when I strolled through it Monday. And all those seedy joints on Bourbon Street are still seedy — in a touristy, seedy way.

As I reflect on all of this now, I wonder how much of this blogging would have been relegated to Twitter if Katrina struck today. I guess I would be able to reflect back on what I “tweeted” using FriendFeed*, but having a calendar view or archive of a period of time, or the use of keywords, categories and tags to help me recall and reorganize my impressions — would they be available to me? No.

Using Twitter is something I do with frequency and I believe it and other means of real-time expression can play a vital role during future events like Katrina (or in not-so-important-events as, say, while watching a football game). But tweeting (or what is often called “microblogging”) is not blogging. It’s not even microblogging, now that I think of it. Something called “microblogging” should have archives and tags. It’s something else, completely. And that’s not bad — indeed, it’s good. And as I’ll always admit, I don’t quite get Twitter — but that’s not going to stop me from using it. But the more I use it, but more I realize it’s not just a blog shrunk down to “micro” size.

Sidenote: Here’s a hack to address my concerns with “losing” the chronological context of tweets. As Twitter does have the blog-conventions of RSS and permalinks, you can set up a account and stream all of your tweets into it. You’ll at least have a nice archive of your tweets.