Twitter, and my habit each day of reading primarily about finance-related developments, is ruining me. So I was especially pleased when BevW asked me to moderate this discussion, as it forced me to take my brain on a much longer than usual walk as I read and studied Edward Luce’s exceptional book, Time to Start Thinking: America in the Age of Descent.
Published in April 2012, Mr. Luce’s book has been widely praised as carefully balanced and filled with evocative analysis and reportage. With a cast of dozens of academic, business and governmental thinkers, it wrestles with America’s relative economic decline, how the global economy is increasingly siphoning away America’s ability to innovate and manufacture, and a wide range of U.S. policy failures from education to healthcare to reinventing government. Too often Internet-entranced readers like me look for distillations to digest quickly, rather than dwell on the fascinating interviews, anecdotal treasure chest, and hard-nosed analyses in Mr. Luce’s detailed yet highly entertaining book.
Reading Mr. Luce has helped me realize I’m often a bit too Wall Street-centric in my Twitter feed and contemplation of What’s Wrong With America. Doubtless, Washington’s decades-long obsession with deregulation, the resulting “financialization” of the American economy (in the 4th quarter of 2001, the financial sector represented 45 percent of U.S. corporate profits, and the lure of those big bucks for decades have caused a corresponding American “brain drain”), the credit bubble, widespread Wall Street malfeasance, and finally, the devastating financial crisis (and its destruction of $7 trillion in wealth) all deserve a blue ribbon as one of the primary accelerators of relative American decline. (Our aggressive and excessive overreaction to 9/11 — leading to two lengthy, punishing, and costly wars — would win my second blue ribbon.) Yet Time to Start Thinking deftly encompasses these critiques, as well as the shortcomings of the Dodd-Frank Act and the exponential rise of corporate money and lobbying in Washington, while placing them within a substantially larger frame.
That larger frame is well-captured by “retweeting” (I can’t help myself) one of my favorite quotes in the book:
In 1905, British PM Balfour on where England is being driven by the tides of economic history: “Does theory or experience provide any consolotary answers to this question?” #CautionaryTale
More than a century later, this time as America perhaps takes its turn, that 74-character quote still packs a punch. I suppose because Mr. Luce is British (though he’s lived and worked in America for years) and the U.S. columnist for the Financial Times, I liked his retelling of how Great Britain pondered, as the United States and Germany began to excel economically, what to do? Today, especially when our government is dysfunctional and our politics remain unimaginative and almost wholly dependent on raising vast sums of money, how should we react to the rise of China and other emerging economies? Helping our “hollowed out” middle class is the theme of many political speeches, but the focus of few if any actual policy correctives. Washington argues endlessly about changes on the margins to taxes and spending, but our consensus economic view remains grounded on the hope that adherence to free market and free trade principles will somehow prevail.
In reality, Mr. Luce argues America faces a highly daunting challenge of replacing a failing U.S. economic paradigm with a new one that enhances innovation and competitiveness in a global economy. We need smarter, agile, pragmatic government, but instead we have sclerotic bureaucracy, industry capture, and political extremism which make changing the status quo virtually impossible.
As in so many areas, Barack Obama’s presidency has failed to deliver the pragmatism and government “that works” which he promised. Obama has been a passive POTUS (even on the stimulus and healthcare reform bills, the drafting of which he delegated to Congress), except when it comes to Wall Street reform, where Treasury Secretary Tim Geithner maintained a vise-like grip on the details as the Dodd-Frank bill moved through Congress. Non-partisan, Mr. Luce’s critiques of the gap between President Obama’s “poetry” and his “prose,” as well as the Tea Party’s contribution to gridlock, are particularly unflinching.
Despite the tendency of most politicians to base their optimism on American exceptionalism, Mr. Luce reminds us (in Huck Finn’s words): “Sayin’ it don’t make it so.” After finishing the book, which is filled also with humor and wit, I imagined a dystopian America where the national news leads with “Here is what didn’t happen in Washington today.”
As for Wall Street, I hope one day we’ll enforce the law and break up the too-big-to-fail megabanks. But that would only forestall another financial crisis; long periods of financial stability are a necessary but not sufficient condition of American economic success. How do we ensure rising personal incomes for the middle class as technology and a global work force make American workers less secure? Maybe there aren’t any good answers, in theory or experience. A few months after he had left the Obama White House, even a “humbled” Larry Summers said to Mr. Luce: “There are good things we can do at the margins,” he said, “But on a lot of this, I just don’t know.”
Gaining a better grasp of the variegated problems and several of the alternative potential solutions, in a book filled on every page with enough succinct intelligence and arch wit for even a Twitter-zen to admire, is a superb start. I’m honored to welcome our distinguished guest to this discussion.
[As a courtesy to our guests, please keep comments to the book and be respectful of dissenting opinions. Please take other conversations to a previous thread. - bev]