But while Washington has been preoccupied with stimulus and bailouts, another, equally important issue has received far less attention — and the resolution of it is far more uncertain. What will happen once the paddles have been applied and the economy’s heart starts beating again? How should the new American economy be remade? Above all, how fast will it grow?
The rest of Leonhardt’s article goes through some of the next layer of Obama admin plans: climate change (“green jobs”), health care reform as stimulus, as well as a revitalized education structure.
I have to say on all those fronts I’m less than optimistic that any of that will come to be the future, production-based, of an economy. Assuming Leonhardt is correct that the stimulus will work (which actually I think at best it may stave off a kind of financial armageddeon), this is the central question. All of which is a variation on Thomas Friedman’s (et. al) calls for a new domestic Marshall Plan. Whether of a green economy, health care & education reform or all three combined. Oh plus infrastructure spending.
As of today Iceland has gone bankrupt as a country. Britain could well be next (h/t Automatic Earth). I just wonder if we have reached the point where any top-down mechanisms will actually work? Whether we are witnessing instead the death spiral of a series of our institutions simultaneously (a la Homer-Dixon’s Upside of Down). As a student of history, I know that at certain crucical periods the old order simply dies in an often catastrophic and rather quick end. e.g. Alexander the Great’s conquest and destruction of the previous ziggarut/ancient Near Eastern model of governance and cosmology, replaced with Hellenization and the spread of the polis. Or the Industrial Era’s mass upheveal. While there was talk for some of the rise of the post-industrial economy as a new stage in economic history co-arising with the Counterculture of the 60s and the dying of the centrist liberal post WWII order–and I don’t want to minimize the upheveal that period created (e.g. rise in crime, drugs, urban black holes in the West, decolonialization and revolutions in the Third World), I think we can’t compare that period to the mass upheveal of say the Industrial Era.
The question that lingers on my mind is whether we are really headed into that storm now or very soon anyway. We often hear tales (some tall, some more accurate) about writings days before the fall of the Berlin Wall discussing the inevitable existence of the Soviet empire and communism. And then, poof, it was pretty well gone. The potential I think is coming for there to be a similar shift–where what will occur on the far side of the interim nonequilibrium dynamics, i.e. when a new equilibrium of some sort is established, will look radically different than what we have today.
I think there was a time for the sort of top-down led program of shifting to a new productive economy (or at least top-down aided if not led): that period was the Bush presidency. That period was clearly wasted. And I wonder now if it is gone and Obama’s plans are far too little, far too late.
Update I (3 hrs later): As a somewhat silly-actually not example of the thing I am talking about. Talking to our children and grandchildren about how we lived through 2009, the year the newspaper (and much else died) will be an interesting discussion. Discussing with them newpapers will be like for me hearing about Model Ts or horse and buggy. I’ve seen them (in a museum in the former case, on the road once in Amish country in the latter), but that is the kind of thing on a smaller technological-social scale. [Although on second thought I guess newspapers aren’t exactly a small deal]. How crazy will it be on a larger scale?