Navigating the Economic Crisis
17 November 2008
We are living through the most difficult economic crisis since the Great Depression. Every day is filled with news about former pantheons of wealth and industry that are teetering on the edge of disaster. It is conceivable, for example, that the end of the year could mark the end of the automobile industry in the US. Just a couple of years ago GM, Ford, and Chrysler seemed to be on an upward swing thanks to SUV, pickup truck, and other gas-guzzling vehicle sales. Now we are on the brink of losing our last business connections to Henry Ford and the industry that brought us the Model T, the Cadillac, and the Mustang.
The auto industry is, of course, only the tip of the iceberg. AIG needs yet another financial bailout from the Washington. Banks remain over-leveraged and risk-averse. State budgets are hemorrhaging. Consumer spending is plummeting on the eve of the holiday shopping season. Worst of all, the leaders of the United States and other major countries around the world do not have a clear sense of what to do. For all of our knowledge about economies and all of our studies of the Great Depression, we seem unable to ride this tiger.
What should we do? I do not have any simple answers, but I think we must begin by acknowledging the global crisis we are in. The time for denial, or minimization, has passed. We must also recognize that no one has a clear and easy way out. There will be no silver bullet solutions.
The smartest approach, inspired by Franklin Roosevelt in the 1930s, is to experiment. The new president-elect and his counterparts should use the crisis as an opportunity to question orthodoxies and try new things. Why not invest in new forms of public infrastructure? Why not think about new national health plans? Why not seed new green industries? Everything should be on the table. We do not need consistency as much as energy and creativity.
We should have the courage to mobilize our people -- as President-elect Obama already has -- for trying new things in the face of past failures. We should also have the courage when we see that a particular initiative has not delivered on its promise, to admit mistake, and try something new. That is how transformative policy is made -- one experiment after another. That is how FDR helped bring the US out of the last economic crisis on this scale. That is how we must move forward as a nation and global community. A little experimentation can go a long way.
The auto industry is, of course, only the tip of the iceberg. AIG needs yet another financial bailout from the Washington. Banks remain over-leveraged and risk-averse. State budgets are hemorrhaging. Consumer spending is plummeting on the eve of the holiday shopping season. Worst of all, the leaders of the United States and other major countries around the world do not have a clear sense of what to do. For all of our knowledge about economies and all of our studies of the Great Depression, we seem unable to ride this tiger.
What should we do? I do not have any simple answers, but I think we must begin by acknowledging the global crisis we are in. The time for denial, or minimization, has passed. We must also recognize that no one has a clear and easy way out. There will be no silver bullet solutions.
The smartest approach, inspired by Franklin Roosevelt in the 1930s, is to experiment. The new president-elect and his counterparts should use the crisis as an opportunity to question orthodoxies and try new things. Why not invest in new forms of public infrastructure? Why not think about new national health plans? Why not seed new green industries? Everything should be on the table. We do not need consistency as much as energy and creativity.
We should have the courage to mobilize our people -- as President-elect Obama already has -- for trying new things in the face of past failures. We should also have the courage when we see that a particular initiative has not delivered on its promise, to admit mistake, and try something new. That is how transformative policy is made -- one experiment after another. That is how FDR helped bring the US out of the last economic crisis on this scale. That is how we must move forward as a nation and global community. A little experimentation can go a long way.
| 1. November 17 2008 10:44 AM | This is a time for experimentation, no doubt. Let's try to have political patience as Treasury Sec'y Paulson (and his successor) try to right our economic ship. We should remember that under FDR's leadership, there were programmatic missteps before effective policies emerged. It is a time when democrats and republicans must attempt to put aside their differences and begin to think as Americans and what serves the needs of our country, not particular constituencies. It is a time for former adversaries to work together for the good of all. President Obama, who has often said that he admires President Lincoln, could borrow a page from the Lincoln playbook and include some of his former political rivals/adversaries in his cabinet and inner circle of influence. It is of vital importance to our future that Americans have faith in a leadership that is innovative, fair and inclusive. Partisan idifferences must be put aside. --Posted by Alan Greene | |
| 2. November 27 2008 08:01 PM | Well, I have to agree. For once could we just admit that maybe the way we have been doing things might not have been the best way (much less perfect)? The notion that we "can't" have a national health program because it would be "socialism" can be the first thing to go, in my opinion. Call it socialism if you want, I don't care. Why is it socialism exactly, because it's good for the people and no one gets rich as a result of it? Are the armed forces "socialist"? Police forces? Public schools? Anyway, go national program and take all that responsibility off the Big Three auto makers, as well as every other employer in the country and see if that doesn't level the playing field a good bit in the "free market". Not to mention the spur on the economy that it could be when people don't have to devote so large a pct. of their wages to health insurance or out of pocket expenses when something happens. That's in addition to the positive effect on all the people who are uncovered or under-covered now. Government jobs to rebuild our crumbling infrastructure, hmmm..., might be a good idea. Maybe incentivize some entrepeneurial types to re-create our manufacturing sector, could that help? How about passenger rail service? Much more energy efficient than automobiles. All sorts of possibilities, we just need the right attitude and I think that with Obama at the helm we might just have that. We shall see. --Posted by Kevin Mack | |
