Posts Tagged ‘The LOng Depression’

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ECONOMIC ‘RESETS”

June 18, 2012

It is only June and already, I am tired of the political discourses that fill the news about the economy.  One day Chicken Little is forecasting the “Sky is Falling” and the next day, we read about economic optimism as Neal Anthony reported this morning. 

 And in the back of my mind, there is a nagging thought about our response when it happened….dimly I remember the honest dialogs that shared the viewpoint that this should have been expected; the prosperity of the previous decade was unsustainable and we were in a historical adjustment that we should have expected and planned for. Terms like “A New Economy” and “Economic Reset” filled the news and many of us agreed that the first decade of the 21st century was reminiscent of the “Roaring Twenties” – our thinking was flawed, it was not sustainable, and we needed to adjust.

For all of us, I think, that message has faded.  For some, It’s a childish battle between the political parties driven by the single goal of Republicans to oust Obama and regain power at all costs, paired with  Democrats  who foolishly cling to the idea that this new generation of leadership should be able to walk on water and accomplish dreams  despite the absence of collaboration.  In either case, it is finger-pointing of children.  It’s George Bush and the Republicans fault; It’s Barack Obama’s fault – he said he would fix it and it’s not fixed. 

 As for me, I have continued to focus on the uniqueness of the changes we are going through due to the rapid arrival of the digital age, and have lost sight of the historical perspective that indeed, this is a reset-  created because we as a country have gotten off track.

Richard Florida’s the GREAT RESET, kept coming to mind, and after a thorough search of my library so I could refresh my memory, I realized the book must have suffered the fate of so many others when I moved….it was in my office, not my library, and so did not make the cut when I packed last October.   So recently, when I saw the paperback copy at B&N, I grabbed it, and yesterday, sat down to re-read, and discovered a new preface written last year for the paperback edition.  Those few pages brought it all back….

It will take many years to replace the jobs that were eliminated by the crisis and its aftershocks.  The deep economic and financial trauma that hit America represents a crisis of epochal proportions that reflects a deep structural transformation of the economy…

Florida then went on to categorize our “Great Recession” as a Great Reset similar in characteristics to the Long Depression of 1873 and the Great Depression of the 1930s, and together he named them “generational events”.   It took 30 years to recover from the Crash of 1929; adjustments of this nature cannot be fixed overnight, but more important, lasting recovery hinges on four key factors:

  •         Technological Innovation:  Crises reset the innovative engine of the economy
  •          New Systems of Innovations:  Crises create the impetus for building of broad systems of innovation and infrastructure that undergird long-run growth
  •         Educational Changes:  Crises lead to substantial upgrades in our educational system in ways that increase worker’s skills and improve the human capital that powers the economy.  [They] make us better at using our most precious and critical economic resource – human talent.
  •          A Spatial Fix:  Real recovery hinges on major changes in the very way we live (Move from farm to the city; move from city to suburbs, etc.)

 

Basically, Florida maintains that these changes are not initiated by top-down policies and programs from either political party in power, but happen gradually as millions of people respond by changing the way they live.   The lessons of this crisis should remind us that we need to live within our means, reject defining ourselves in terms of material goods and strive for a more meaningful and sustainable way of life.

Yes! This aligns with my own thinking but I mistakenly have attributed it to a perspective based on age. 

Not so, says Florida:

Individual Americans of all ages have already begun resetting their lives and changing the way they live and spend but our political and business leaders have utterly failed to appreciate and engage this economic transformation.  They continue to look backward, with futile attempts to resuscitate the dysfunctional system of banks, sprawl, and the inefficient and energy-wasting way of life that was the underlying cause of the crisis.

Our leaders just aren’t getting it; their mental models are so determined by the old order that they can’t acknowledge that [that order] has already passed.

We need to break with the past and engage the future that is already upon us.

From my own perspective, let’s also add the PRESS to the list of culprits and then try to move forward together in the LONG FIGHT BACK, recognizing we need to address the underlying problems we created that caused this…and neither Romney nor Obama can provide a quick fix.   But as Florida indicated, if we break with the past and engage the future, there is hope we can speed up the recovery so it does not take the 20-30 years of past Resets of a similar nature. We as the people need to fix this; the politicians cannot-no matter whom we vote into office in November.

 

 

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