Thursday, June 12, 2014

Notes on a Sunday morning

From the 8th of June.

The wife watches the Sunday morning news commentary. George Stephanopoulos is on at the moment. We have republicans attacking the President for retrieving a soldier from the Taliban. This is presented on TV as a struggle between republicans and democrats. That's wrong. The actual struggle is much bigger and far more interesting.

The economy -- you remember, we do economics here -- the U.S. economy has been deteriorating for a long time. This deterioration is a challenge in the Toynbee sense: During the life of a "civilization" there is a series of "challenges" which are met with "responses" by a "creative minority". As long as the response provides a satisfactory solution to the challenge, the civilization advances. When the response is inadequate, civilization goes into decline. It's a remarkably simple analysis.

The U.S. economy has been in decline for a long time -- since the 1974 recession, at least. This decline is our challenge. To the rest of the world, it seems the U.S. is weak and vulnerable. That is the motivation behind attacks like the ones that took down the Twin Towers and damaged the Pentagon.

As Toynbee put it, a civilization that is not advancing is in decline. We need a response suited to the economic decline that is the challenge of our time. We've been responding for forty years now, without success; internal discord only grows more strident.

It's time to try a different response.

1 comment:

Jazzbumpa said...

I keep thinking about what we did before 1974.

Robust regulation, especially of finance; steeply progressive tax rates, strong unions --> strong middle class.

I think there were tariffs in there also. They have a bad name these days, but were extremely beneficial, approaching completely necessary for much of our history.

You can also add in non-federal debt / GDP. It rose exponentially until the recent crash.

It's hard to pin down an exact tipping point, but somewhere between 1974 and 1986 the wheels came off, and nobody noticed the skid until 2008. Many are still in denial.