The convulsion of the Great Recession has been the birth pang of a new kind of economy, a new kind of world. We had already been moving towards a
post-industrial society, towards an information age for over a decade, but our pace had been too slow, not global enough, not as drastic as it ought to be. We are still unsure as to which directions to go. There is open talk of a
double dip recession. The jobs are not here yet. It is still scary times.
After the
Great Depression,
America very clearly became an industrial economy. It was no longer the agriculture economy of
Abraham Lincoln's time. A huge economic shift had been made. But there was pain along the way.
It is one of the failings of democracy that you need a big, bad event to get people riled up to go do something big. FDR wanted to enter the war long before
Pearl Harbor happened, but he waited, and waited and waited until Pearl Harbor happened.
Why do you need a 9/11 before you realize the cause of democracy needs to be furthered across the
Arab world? Why do you need a Gulf Oil Spill before even the average person starts thinking in terms of a zero emissions future? Why are intellectual extrapolations not enough? Or perhaps Hollywood is not doing its job.
I supported the
Obama stimulus plan, but my criticism was and is that it was not forward looking enough. Roads and bridges are important but those are rickety swings of the
industrial age. The roads and bridges of the information age are to do with the internet.
The stimulus bill was not big enough. It should have been a trillion. And it was not future oriented enough. The stimulus needed to be about turning America into a country of 75% college graduates. You can't do that with the existing colleges and so you turn the entire country into one big college. Universal broadband. Free up the spectrum, not in 10 years, but now. (
India Broadband Spectrum Bids)
It was lack of vision that brought down Wall Street more than anything. Pumping more and more money into
real estate is not my idea of visionary investment. They were accumulating so much money and all that needed to go somewhere. And so they came up with ever nefarious ways to put more and more money into real estate.
Wall Street was not thinking in terms of the jobs of tomorrow, the companies of tomorrow, the industries of tomorrow. It was not thinking futuristic enough. It was not thinking global enough. If it had been thinking global, it would have sunk a few trillions into global microfinance and seen returns that were better than that of the S&P 500. It would have put the money into global infrastructure projects. There were clear alignments to be sought between self interest and global interests, but they were not sought.
BusinessWeek:
Lucky for Obama, U.K.'s Cameron Is Embracing Austerity First
Plugging their economies into the life-support system of central bank liquidity and massive government stimulus packages was the easy part. The tough question is how long their governments should stand in for a private sector too nervous about the future to invest and hire. With the world economy threatening to slide into a double-dip recession, both the U.S. and the U.K. are nevertheless talking about fiscal austerity. The only good news for Obama is that Cameron is going first. ..... spending cuts of as much as 40 percent ..... the U.K. doesn't want to be the next Greece. ...... bond vigilantes are driving U.K. economic policy. "Questions that were asked about the liquidity and solvency of banking systems are now being asked of the liquidity and solvency of some of the governments that stand behind those banks" ...... "The austerity debate is now not about whether fiscal tightening in advanced economies is necessary, but on when it should begin in earnest." ..... growth collapses if all of the members simultaneously abstain from spending. Too many governments curbing spending and raising taxes in parallel would snuff out the nascent recovery. ...... Consumer confidence has dipped ..... government aid can't be removed without risking a relapse. ..... With so many job cuts, Cameron could find himself coping with strike action on a scale not seen since Margaret Thatcher neutered the nation's private-sector unions. ...... The banking industry, meanwhile, is crying foul at the prospect of bonus caps and a top income-tax rate that will climb to 50 percent from 40 percent. Threats to leave for Switzerland may prove more than empty. ...... The path Cameron is charting is so arduous, and public opposition is likely to become so intense, that rating agency Standard & Poor's isn't convinced he can deliver ...... If he forges ahead, there is a real chance that Britain returns to a recession. Neither scenario is cheery—and neither is beyond imagining for the U.S.
I am for a second stimulus bill that will focus primarily on creating jobs. It was finally the massive spendings of
World War II that ended the Great Depression. Bold action is necessary.
A second stimulus package would be big, it would focus on a radical freeing of the wireless spectrum with a goal of cheap, universal broadband, it would entail creating millions of new government funded jobs, likely in the education and health sectors that people can go for with short training periods.
A lot of smart people ran banks. But banks had to be bailed out. Then the stimulus happened. That was the government bailing out the government. A lot of money has gone to keep unemployment benefits rolling, to keep paying teachers and police officers and firefighters. We did not expect the private sector to take care of the bailout and the stimulus. Similarly in these times, it has to be the government that has to step in to create millions of new jobs. Just like the banks paid back, the people will too.
The deficit and the debt will have to be reigned, but now is not the time.
Image by Thomas Hawk via Flickr
