The coming age ...in America

[LL]

We’ve now lost 8.4 million jobs in this recession, and a vast majority of them are gone for good. The politicians are clambering aboard the jobs bandwagon, belatedly, but very few are telling the truth about the structural employment problems in the U.S. and the extremely heavy lift that is necessary to halt our declining living standards and get us back to an economy that is self-sustaining.

We don’t hear a lot that is serious about the sorry state of the nation’s infrastructure or the trade policies that crippled so many American industries or our inability (or unwillingness) to compete effectively with China when it comes to the new world of energy for the 21st century or our abject failure to provide a quality public education for the next generation of American workers, scientists, artists and entrepreneurs.

Speaking at a conference here on Wednesday, Gov. Ed Rendell of Pennsylvania said that if we don’t act quickly in developing long-term solutions to these and other problems, the United States will be a second-rate economic power by the end of this decade. A failure to act boldly, he said, will result in the U.S. becoming “a cooked goose.”

Neither the politicians nor much of the mainstream media are spelling out the severity of these enormous structural problems or the sense of urgency needed to address them. Living standards are sinking in the United States, and there is no coherent vision or plan for reversing that ominous trend over the long term.

The conference was titled, “The Next American Economy: Transforming Energy and Infrastructure Investment.” It was put together by the Brookings Institution and Lazard, the investment banking advisory firm.

When Governor Rendell addressed the conference on Wednesday, he used words like “stunning” and “unbelievable” to describe what has happened to the nation’s infrastructure. His words echoed the warnings we’ve been hearing for years from the American Society of Civil Engineers, which tells us: “The broken water mains, gridlocked streets, crumbling dams and levees, and delayed flights that come from failing infrastructure have a negative impact on the checkbook and on the quality of life of each and every American.”

The conference was sparked by a sense of dismay over what has happened to the U.S. economy over the past several years and a feeling that constructive ideas about solutions were being smothered by an obsessive focus on the short-term in this society, and by the chronic dysfunction and hyperpartisanship in much of the government.

I was struck by the absence of grousing and finger-pointing at the conference and the emphasis on trying to develop new ways to establish an economy that is not based on financial flimflammery, that enhances America’s competitive position in the world, and that relieves us of the terrible burden of reliance on foreign energy sources.

I was also struck by the pervasive sense that if we don’t get our act together then the glory days of the go-go American economic empire will fade like the triumphs of an aging Hollywood star. One of the participants raised the very real possibility of Americans having to get used to living in an economy “that won’t be number one,” an economy that perhaps is more like Germany’s.

Rescuing the U.S. economy will require a commitment, and undoubtedly sacrifices, that need to start now. And it will require leadership that pulls together the best talents from all sectors of the society — not just business, not just government, but from everywhere.

Bruce Katz, the director of Brookings’ Metropolitan Policy Program, discussed some of the steps that need to be taken to remake an economy that has been thrown completely out of whack by frantic, debt-driven consumption, speculative bubbles, exotic financial instruments, and so on.

A new, saner, more sustainable economy will have to be more export-oriented, powered by cleaner fuels, bolstered by innovation that comes from a renewed focus on research and development, and committed to delivering a better-educated, more highly skilled work force.

Mr. Katz believes this is doable, but by no means easy. The nation’s infrastructure, he said, will have to “shift from 20th-century models of transport and energy transmission to rapid bus, ubiquitous broadband, congestion pricing, smart grid, high-speed rail and intelligent transport.”

New ways of financing such transformative changes will have to be developed, linking public and private capital, preferably through the creation of a national infrastructure bank, among other things. The nation’s political leaders and the public at large will have to grasp the difference between wasteful spending and crucial investments in the future.

It’s time for serious people to step forward and help lead on these critically important issues. Time is short.

 

[Frost]

Not being an economist, my opinions and thoughts on the economic state of affairs of this nation are naturally of a somewhat vague and general nature.

It seems to me that for many many years our "wealth" as a nation has been measured in nothing but theoretic constructs and our economy based on tricky math designed to make 0+0 add up to billions.

I have never heard of someone feeding their family stocks, or driving their bonds to work. I can't run my jeep on a companies 4th quarter earnings and I am pretty sure the 7 day SEC yield never cured a disease.

Nobody has any money because no one has a job. There are no jobs because this country doesn't actually make or do anything anymore. We can't make or do anything anymore because everyone else makes it better and/or cheaper, mostly because we are too busy worrying about how to make the most money.

Personally, I do not see how anyone can seriously talk about "preserving" the american economy. It is time for America to adapt or die, economically speaking at least.

It should be relatively obvious that you can't base an entire economy on nothing but numbers and pieces of paper with pictures of dead guys on it, there needs to actually be something REAL behind the math to give that fancy paper value. Otherwise it isn't even worth as much as the paper I wipe my ass with or blow my boogers in.

 

[Puff Daddy]

We have to get past some issues first, namely the idea that we are morally obligated to serve the world and not ourselves. We have plenty of oil reserves right here to create some energy wealth and good jobs, we have the ability to produce goods and compete right here at home rather than allow cheap imports from third world countries, we have to reset our economy to a natural value and balance and choke down the bitter remains of the inflated foolishness our dollar has been based on for too long. Then, we can begin rebuilding America. A generation will suffer from the growing pains, much like during the great depression and those years following it. But, those kind of times also fuel values that are presently horribly out of balance, and as a biproduct of that hardship a struggling generation could also start to cure much of the disgusting, loose, self serving and self degrading ethics of our present condition.

 

[LL]

Frost pretty much nails it.

The reason no one today has a clue about how to "regain" what has been lost, is because there was no method used the first time around. It was a happy accident: Two global wars left the developed/industrial world a pile of rubble except for America---because it was protected by geography---which allowed it to produce Stuff without competition that the rest of the world was starving for. That's it. The "secret."

Worked great for 30 years or so.

Then, seeing an opportunity to make a short-term buck, we started to selling the techniques, methods, and processes we'd developed to make Stuff. Sold our seed corn, to mix a metaphor.

That cash pocketed, by the mid-1990's there wasn't much left of the store to sell, so we invented Tricky Ways to manipulate money itself, so that Making Stuff wasn't even necessary to Make Money.

Twelve years later when that Ponzi Scheme collapsed, America was left walking around in anxious circles like the owner of a burned-out house, muttering tearfully "What are we supposed to do now?"

You can see the problem. Short of a time machine, there is no way to re-start the American Economic Engine of our past.

In the meantime, the meter is running: the infrastructure is collapsing, and the (increasingly skill-less) population is growing exponentially.

 

[puros_bran]

Nonsense... All we have to do is make the rest of the world rubble again... walla problem solved.

 

[LL]

Nonsense... All we have to do is make the rest of the world rubble again... walla problem solved.

:cheers:

 

[Justpipes]

We have plenty of oil reserves right here to create some energy wealth and good jobs, we have the ability to produce goods and compete right here at home rather than allow cheap imports from third world countries, we have to reset our economy to a natural value and balance and choke down the bitter remains of the inflated foolishness our dollar has been based on for too long. Then, we can begin rebuilding America. A generation will suffer from...............

PD, I whole heartedly agree with you but...........

these ideals go completely against anything that our current administration believes or will attempt to implement. In fact they are the complete opposite of their policies.

If people don't stand up for the ideals that built this great nation, yes, a generation is going to suffer and another one and the one after that, and the one after that......under the unsustainable debt that the current administration is running up with no intentions of stopping.

Please don't respond with what past administrations did. Today is today. The currrent administration has the greatest opportunity in the history of the United States to be heros and champions of the American way but so far they and particularly their leader has shown that they/he intend to destroy the American way and it's people, that made this nation great.

 

[LL]

You're not getting it, JP.

The current situation transcends politics.

Politicians & political parties will have no more effect on what's coming than the management of a ski lodge has on an avalanche bearing down on it. Decades of short-sighted greed having been the trigger event, and now it's too late to take it back. Inertia and ripple effects---moving trees knocking down other trees, and moving rocks knocking loose other rocks---are what avalanches are made of. They generate their own power.

 

[Frost]

Nonsense... All we have to do is make the rest of the world rubble again... walla problem solved.

You joke I assume, but I must admit there are times where I would gladly trade such modern necessities as indoor plumbing, readilly available food and shelter for a more simple life where all you have to worry about is staying alive and maybe occasionally breeding. Perhaps a global catastrophe is just what we need.

 

[LL]

Perhaps a global catastrophe is just what we need.

There's a chance that the escalating pressure will result in sudden mayhem, but more likely it will simply result in a reduced standard of living. (Though if it's low enough those who remember the Good Old Days will see it as a catastrophe.)

 

[stoked]

This economic downspell could end up being similar to the one experienced in Britain in the 80s. That lasted a decade. The reason was monetarism. The british gov't tired to infuse the economy with money to keep monetary levels stable. Their economy collapsed. High unemployment rates became a permanent feature of the british economy.
In those same year the US Federal reserve did not try to artificially inject money into the economy but rather accept a recession that would recover itself and lead to 7 years of prosperity while the British economy failed. Here's an article explaining:


http://www.huppi.com/kangaroo/L-chimonetarism.htm


If the US and Canada continue with their plan to inject untold amounts of money into our economies to stimulate growth it will lead to long term economic instability and high unemployment rates over a longer term. We are making the same mistakes that Thatcher made in the 80s (Britain). Stupid!

 

[Puff Daddy]

Frost pretty much nails it.

It is time for America to adapt or die

I would disagree with that simply because adapting means accepting and working with something. What's there to work with is mostly substandard and is modeled to keep a level of parity among all countries that is unacceptable because it's based on a too low bar. Rather than adapt, we need to create new. We need to create wealth and stability to sustain us, not slip into the global economic mold and find our sad little niche.

JP, the only response I can give is this, it does no good to try to lay blame on this present administration that has only been in control for one year when this thing has been coming for a long, long time. That is not a biased party comment. Certainly this present admin is doing nothing to create a new economic machine, their entire goal is placing thumbs in dikes. But, when was the last administration that created some serious economic structural integrity? The whole model is broken, not just the left-leaning present driver.

It will take conditions that are a lot worse than what we're experiencing now to motivate people to move away from the present economic model, mostly because it will be very, very painful to initiate and people would rather put their faith in a pipe dream than take on certain upheaval (though the two are one and the same, they merely have different timelines).

 

[Frost]

PD - Adapting doen't imply quiet acceptance of anything really. If I had said accomodate or conform you might have a significant point, but to adapt just means to modify the way we do things according to present circumstances and doesn't really carry in and of itself the conotation you are giving it.

If we were to "create wealth and stability to sustain us" as you said, that would be considered an adaptation as compared to the way we have been doing things, which has proven to be both unstable and unsustainable.

We are just playing semantics here obviously, but it is important to understand so as to avoid uneccesarry confusion. I do not necesarilly disagree with anything else you wrote.

Edit: To quote Tom Robbins (I think, might have been someone else that said it first):

"There's no such thing as synonmyms."

 

[mark]

there are times where I would gladly trade such modern necessities as indoor plumbing, readilly available food and shelter for a more simple life where all you have to worry about is staying alive and maybe occasionally breeding. /quote]

You've got to be kidding, maybe you've never really thought it through, or maybe you've never been in that position,,,

I've been there and done that,,,due to circumstances beyond my control,,,it sounds good on paper, however the actuality of it is desperation.


I do understand your train of thought, but I'm reading your post and taking it literally ,,,maybe it's just me, but it strikes a deep nerve,,

 

[Puff Daddy]

Yo Frost, I think it depends on what exactly we're talking about. When you mentioned adapting I immediately assumed we were talking about our economy within the global economic machine. When you participate in a structure like that you either lead and set the tone or accept the dominant parameters and try to work within them. My comment is directed at a position that we should not adapt, but lead with our own interests at the forefront. If we are to adapt to the global economy, then we are allowing the other countries to define how we do business. We should, in fact, make them adapt to us. You cannot lead and follow at the same time. Just ask China.

 

[Frost]

Essentially what I was trying to say was that it seems to me that up to this point the American economy is based essentially on the accumulation of numbers and only numbers ($), to the detriment of all else. This has now reached a point where all of our goods and services which actually give those numbers value are now products of other countries and essentially under their control. If we need those goods and services, we must of necessity be willing to accomodate those other countries and their interests since they are the ones who actually have the valuable commodities.

We are now realizing that our numbers (our money) really have no value in and of themselves since there is no concrete, usable, sellable goods or services to back them up and everyone else is becoming less and less willing to invest in simply our word of honor, good will and our friendship.

The adaptation I had in mind was a shift to an economy focused more on improving and maintaining infrastructure as well as on products and services (that are produced and provided here under the control and guidance of our own laws and standards and used as we see fit) as opposed to being focused solely on the accumulation of numbers which really only represent pieces of paper which really only represent an investment of faith in the continuation of the federal government.

Without control over those real, concrete and usable goods and services we have no power. We can lead wherever we want, but nobody else in their right mind is going to follow if we don't have a carrot to put on the stick.

Again, I am not an economist and I don't read the newspaper at all, much less the business or economy sections. I don't really have the depth of understanding, vocabulary or math skills necessarry to make sense of the various little bubbles of trouble and the multitude of different crises that are affecting the economy as a whole, but it seems to me just by looking at the big picture that the whole thing is built on a rather shaky foundation.

 

[Puff Daddy]

Amen to that, mr Frost.

 

[Wet Dottle]

To me, this seems a like the typical speech trying to gain sympathy (votes?) based on the current state of discontentment. Much of it is based on opinions instead of facts. It's true we are living in harder times, but there's been worse and America has always vanquished them, coming out stronger and better than ever. I have unlimited confidence that we will do so again.

 

[Frost]

It may indeed have been a speech looking for sympathy votes. Nonetheless, I think it is a valid topic of discussion, even for non-politicians.

 

[Wet Dottle]

...I think it is a valid topic of discussion, even for non-politicians.

I agree. Not only valid, but also interesting.