The present economic crisis began in 2007, but we did not get to that point overnight. The American economy has been in decline for a long time. Some people trace it as far back as the 1950s, when America was at the height of its industrial power, and corporations decided to scrap the concept of “durable goods” and replace it with “planned obsolescence.”
The “hollowing out” of the American industrial base was well advanced by the recession of 1982. America’s industrial region became known as the “Rust Belt.” Yet the transfer of American industry and jobs overseas continued through the 1990s.
The masters of finance were in denial. They imagined that technological innovation and unending growth would create good jobs for all. Exuberant investors thought the bull market and prosperity were permanent. During the high-tech bubble in the late 1990s, they even proclaimed the “end of the business cycle.”
After the turn of the century, everything changed. The rise of terrorism, the invasion of Iraq, and especially the housing bubble and credit bubble, led to near melt-down of the U.S. financial system. The run-up of U.S. personal and government debt during the same period limited our ability to recover. (Hard to believe that as recently as 1998, the federal government was running a surplus!) The economic contagion went worldwide! Entire countries in Europe are in danger of sovereign default, and some states in the U.S. as well.
No one can predict what dislocations may lie ahead. For instance, even the experts did not expect the collapse of housing prices, or the financial crisis on Wall Street. No one predicted the BP oil spill, and certainly no one was prepared to respond adequately. Even now, as we come to grips with the economic pain inflicted on the Gulf Coast fishing and tourist industries, we can only guess at the extent of long-term environmental destruction.
It took us a long time to get into this mess, and it will take a long time to resolve it. I believe we have entered a prolonged period of economic turbulence and change, with unpredictable social and political consequences. If there were only one or two areas of concern, perhaps we could have a sense of direction. But there are too many variables in the worldwide economic system.
Pundits who follow Wall Street complain about “uncertainty.” I think it’s more than that. We always live with uncertainty.
I sense economic fear and political confusion. Most of us put our own self-interest first, as if we’re in a scramble for survival. We need competence and integrity throughout our society, and especially among out leaders.
— John Hayden
- You: The Democrats’ 2012 Rust Belt Problem (newsweek.com)
- You: Fixing the U.S. economy (search.japantimes.co.jp)