I always look forward to the Sunday morning political talk shows, particularly “This Week with George Stephanopolous” on ABC and “Meet the Press” with David Gregory on NBC. (I’ll miss Stephanopolous on “This Week.” He did a good job of moderating the discussions and brought a lot of political savvy to the table.)
This morning was particularly interesting, since the hot topic was Friday’s unemployment report. It seems that the Obama administration was actually expecting a good report, maybe even job growth, and was blind-sided by the size of the job losses. Some question whether high unemployment has become a structural problem. One pundit described it as a “kick in the teeth” for Obama. Another noted that “we’re in new economic territory; we’ve never seen anything like this before.”
Predictably, the political left is calling for more stimulus, led by Obama’s chief economist, Christina Romer, apparently believing that a second application of the same approach will yield different results. The political right scoffed, calling instead for lower taxes and for government to get out of the way of private business, forgetting themselves that their approach has had no better results. Neither side seems willing to admit that we’ve arrived at this economic mess of biblical proportions in spite of having tried both approaches over and over for decades.
Obama himself has said that what’s needed is a rebalancing of the global economy. Exporters can no longer rely upon the U.S. to consume their over-capacity. The Federal Reserve has said the same thing. So has the International Monetary Fund. So has the World Bank. If they all understand this, then why are they desperately trying to restore the economy to its former status quo, attempting to resume the forced-feeding of debt for American consumers? Why do they stand idly by while China, Germany, Japan and Korea implement plans to boost exports further?
Why? Because they desperately don’t want to believe that their darling paradigm of globalization has failed them. Economists don’t want to believe it because they can’t explain why it failed. Political leaders don’t want to believe it because fixing it will force them to face some grim realities and tough decisions. They’re giving it another shot, hoping that the second try at globalization will yield different results.
“We’ve never seen anything like this.” Indeed. Well, get used to the view because unless economists open their eyes and minds to the ramifications of population growth and unless political leaders grow the collective backbone needed to make difficult decisions, we’re going to be seeing a whole lot more of it for a long time to come.