You have to love Thomas Friedman. Considering his proximity to a certain Princeton professor and Nobel Laureate, one has significant hurdles to overcome to display moments (and I do stress moments) of insight.
“In our subprime era, we thought we could have the American dream – a house and yard – with nothing down. This version of the American dream was delivered not by improving education, productivity and savings, but by Wall Street alchemy and borrowed money from Asia.”
Almost. The money didn’t come “from Asia” Tom, it was printed by Alan and Ben. But at least you’re on to something. At least however, you understand the need for savings. I’ll give that one to you. And that means you weren’t swayed by the “paradox of thrift” drivel!!
“Our education failure is the largest contributing factor to the decline of the American worker’s global competitiveness, particularly at the middle and bottom ranges,” argued Martin, a former global executive with PepsiCo and Kraft Europe and now an international investor. “This loss of competitiveness has weakened the American worker’s production of wealth, precisely when technology brought global competition much closer to home. So over a decade, American workers have maintained their standard of living by borrowing and overconsuming vis-à-vis their real income. When the Great Recession wiped out all the credit and asset bubbles that made that overconsumption possible, it left too many American workers not only deeper in debt than ever, but out of a job and lacking the skills to compete globally.”
This problem will be reversed only when the decline in worker competitiveness reverses – when we create enough new jobs and educated workers that are worth, say, $40-an-hour compared with the global alternatives. If we don’t, there’s no telling how “jobless” this recovery will be.”
Good, now you’re getting it. We didn’t create any wealth and productivity, we simple pulled money out of a hat, so to speak, and we overspent. Thus, you’ve “discovered” what Austrians have long known, that you can’t spend your way to prosperity.
Those who are waiting for this recession to end so someone can again hand them work could have a long wait
That Tom, is how capitalism works. The free market, it’s an amazing thing. But, it requires that those who do produce can realize their gains, and not have leviathan steal their wealth. And what has this administration proposed? Is it lessening the burdens on creativity and production, or is it threatening them with confiscation? Hmmm…
“Those with the imagination to make themselves untouchables – to invent smarter ways to do old jobs, energy-saving ways to provide new services, new ways to attract old customers or new ways to combine existing technologies – will thrive. Therefore, we not only need a higher percentage of our kids graduating from high school and college – more education – but we need more of them with the right education.”
Yes of course. Again, I beleive that was Schumpeter’s “creative destruction”.
“Bottom line: We’re not going back to the good old days without fixing our schools as well as our banks. “
Well Tom, I have some news for you. Schools are public, meaning they are run by the government. Well, they’re run by the unions. Until that (well, both) situation changes, there’s not going to be any changes in education, and the situation will unfortunately, only get worse.
The solution is actually very simple. Free markets and capitalism do work. In fact, they’re the only things that actually do, and they work wonders. Maybe you’re coming around, I don’t know.
Oh, and the only bank that needs “fixing” is the Fed.