A few financial writers are beginning to get the idea that this economic crisis is different that the ones that have preceded it. Paul Krugman is not one of those, of course, as he continues to compare this one to the Great Depression of the 1930’s, urge that we use the same measures that did not work for that one, since he isn’t recommending another world war, and claim that we can run up debts and magically erase them by GDP growth just as we did after World War Two.
Others, like Edward Luce, recognize that this one is different but see no cause for alarm in that, as described in a recent article in Foreign Policy titled "A Nation Of Spoiled Brats." Don’t let the title keep you from reading it because, though he does talk about the American public, I found nothing in the article to justify that rather odd title. He does talk a bit, and quite interestingly, about the “decline” of this country.
He admits that we certainly have not declined militarily, for whatever that’s worth, but points out that despite Obama’s claim to the contrary in his most recent State of the Union we have declined in our relative economic standing in the world, from 31% of the world’s economy in 2000, to 23.5% in 2010. That’s a pretty sizeable drop.
Then he puts on his rose colored glasses and says that’s actually a good thing, comparing it to the Industrial Revolution in the 1750’s, because the whole world’s economy is growing, he says, and the rest of the world is simply growing a bit faster than we are. Oh, God, he sounds like Paul Krugman. “We did it in 1750, so we can do it again in 2012.” Um, the world changed a little bit between 1750 and 2012.
He and Paul Krugman both assume that because a car can get from 0-60mph in 12 seconds, then it can get from 60-120mph in the next 12 seconds. News flash; the car may not be able to get to 120mph at all.
Yes, this recession is different; it's the result of a changing world, called globalization. We have enjoyed an awesome standard of living for about five decades now, the envy of most of the world. We have assumed that when the rest of the world could, they would bring their standard of living up to match ours. Not going to happen, because the world does not have enough resources for that to happen. The standard of living is going to become more equal on a worldwide basis, but as it does, as the rest of the world rises, we are going to decline.
We have to face the facts of life. The world has changed, and rather than complaining and trying to bring the old one back, we should be finding ways to make the new one work better. We could do that if we tried, we're pretty good at stuff like that, really, but we're not even trying.