He's pushing resilient communities now (CNBC). Key phrase that Simmon's uses: "liberating the workforce." I need to finish the RC book so people at least have a template for what that means in more concrete terms (and how to implement it).
NOTE: The current financial and economic debacle in the US almost guarantees a Republican rout in November. It's do or die on a military "solution" to Iran, for both Israel and the Bush team, during the months of August/September.
Wow. The US mortgage industry effectively collapsed today. Ain't no way for Freddie and Fannie to raise the capital necessary to cover the growing losses via market mechanisms. Tax payer bailout, another in a rapidly growing string, enroute.
I suspect more strongly worded versions of this narrative is going to play well in the coming backlash. It's going to be VERY ugly in the US as conditions worsen.
In Aesop's fables, there is a tale of the goose that laid golden eggs. The owners of the goose, getting ever wealthier due to the golden eggs laid each morning, weren't content. They wanted grow rich faster. So, they reasoned, if we could only cut open the goose, we could get to the source of the gold and avoid waiting for our reward. However, when they killed the goose and opened it up, they found that the goose was like any other. They had destroyed the miracle and soon became destitute.
In a very real way, the US middle class is the Goose that laid the Golden Eggs for the US and the global economy. Looked at over history's long view, the arrival of the US middle class after WW2 looked like a first: a nation of educated and politically empowered workers fully compensated for their toil. The wealth it produced during the years it was in ascendence has been unmatched in history.
However, things changed. The US middle class is now in deep decline -- average incomes have been stagnant since the mid seventies and rapidly increasing costs are eating the rest. Its emergence is looking more like an historic anomaly than any self-reinforcing trend line.
The reason for this decline is that we are in the process of killing it. Here's the rogues list that killed the Goose:
US political parties via wealth distribution. The Democrats (wealth given to the poor) and the Republicans (wealth taken by the rich).
Corporations via profit maximization. Shifting the productivity of the US middle class to global locations (which undermines any presumption of comparative advantage). Corporations are not aligned with the interests of the US middle class, but with that of profit maximization within the global marketplace.
The financial world running successive bubbles/scams. A natural consequence of rapid wealth accumulation (see wealth transfer above) in the hands of a global elite is that there are too few real investment opportunities at manageable scales. The result is an endless stream of speculative bubbles/scams aimed at drawing wealth out of the middle class and each other.
The Financial Times reports that the credit crunch is hurting the ability of private equity firms to use dividend recaps in the UK ($60 billion or so a year). Essentially you buy a company with a good balance sheet. Replace the management team. Have the company borrow to the hilt and then pay that borrowed money back to yourself as a dividend. Gotta love financial innovation.
Joseph Stiglitz has an excellent article on the demise of Neo-Liberalism (this is liberalism in the classic sense which means free and unregulated markets -- in US domestic politics it's aligned with conservatism, although it has little to do with true conservative values). He points out the flaws of moving towards a global economic platform free of any control loops (amplified by a lack of domestic controls in the world's largest economy).
The world has not been kind to neo-liberalism, that grab-bag of ideas based on the fundamentalist notion that markets are self-correcting, allocate resources efficiently, and serve the public interest well. It was this market fundamentalism that underlay Thatcherism, Reaganomics, and the so-called “Washington Consensus” in favor of privatization, liberalization, and independent central banks focusing single-mindedly on inflation.
For a quarter-century, there has been a contest among developing countries, and the losers are clear: countries that pursued neo-liberal policies not only lost the growth sweepstakes; when they did grow, the benefits accrued disproportionately to those at the top....
Today, there is a mismatch between social and private returns. Unless they are closely aligned, the market system cannot work well.
Neo-liberal market fundamentalism was always a political doctrine serving certain interests. It was never supported by economic theory. Nor, it should now be clear, is it supported by historical experience. Learning this lesson may be the silver lining in the cloud now hanging over the global economy.
Nobel Prize winning economist Joseph Stiglitz tells us that neo-liberalism, witch is a catch phrase for policies that favor domestic deregulation and dismantling trade barriers internationally, has failed.
The problem that Stiglitz fails to acknowledge is that despite the questionable record of these practices, they still hold considerable sway in the media and in the popular imagination. Twenty-five years of repetition have created an almost Pavlovian reflex that equates "free markets" with "good" Willem Buiter might call it "cognitive capture." I think of it as closer to brainwashing. And the romantic appeal of the neo-liberal model has impeded moving beyond it.
This is what is called a false information cascade. It's a situation where everyone punts decision making on a certain topic in favor of earlier decision makers. So, despite the accumulation of evidence to the contrary, people will continue to cling to the "accepted" decision. When an information cascade collapses, it is usually sudden, and the results can be fierce (see Roubani's essay on the collapse of Bretton Woods 2).