Five years after the credit bubble burst, the best experts in the country are still wondering why the robust recovery isn’t happening. They employ pessimistic words to avoid the one truth that is perhaps less convenient than Al Gore’s.
“Growth in GDP has been positive, but not exceptional,” UCLA economists wrote in their quarterly Anderson Forecast. “Jobs are growing, but not rapidly enough to create good jobs for all.”
The report, which analyzed long-term trends of past recoveries, found that the long-anticipated “Great Recovery” has not yet materialized.
That truth is that that the American economy has finally become like the European economy. Whether we like it or not, the American economy is going to resemble that of France and Germany, with slow, sluggish upturns and mild downturns punctuating vast seas of stability.
Fierce competition from Europe and Asia put upward pressure on wages brought by aggressive inflation are enforcing the regime that “socialistic” policies have been enforcing in Europe for over forty years: efficiency. The high wages that strong unions have enforced for decades in Europe are finally coming to the US as businesses that need stability for successful operation realize that they must pay wages that alleviate some of the effects of inflation in order to keep their best employees. Consequently, gone are the most meaningless jobs that one scarcely sees in Europe: parking attendants, valet parkers, bus boys, etc. The most mundane jobs have been automated and the remaining ones ultimately demand a living wage. This level of operational efficiency will not drive job growth.
Similarly, the marketplace is making US capital markets like Europe’s by enforcing stability. Another speculative bubble in the US won’t just be disastrous for the public at large who will be fleeced by opportunistic, well connected executives. It will be disastrous for American institutions who now have to compete globally for the dispensation of capital against mighty institutions in Europe, Asia and Middle East. Short term speculative gains are likely to cause long term annihilation for firms that undertake the Ponzi schemes of the real estate bubble, whether the institution is bailed out or not. Banks’ reluctance to lend even to the most credit-worthy borrowers underscores this fact. Corporate cash hoarding also underscores this fact. They all realize that the next mistake can have existential ramifications whether the government plays savior or not. The core functions of the company matter again. As has always been the case in Europe, a car company has to be a car company again, and a bank has to be responsible.
All of which sums up to a European existence: mild fluctuations peppering vast seas of incredibly boring stability. Global competition enforces a high unemployment rate in such regimes. Companies running efficiently will never effect full employment. This is why Europe has persistent, high unemployment. It is not because they have trouble creating wealth or because they are economically and fundamentally lazy. It is because they are closer to the economic endgame that the US is. Forbes Magazine laments the fact that no path to full employment is visible on the most distant horizon, but, beholden to staunchly conservative owner, it will be the last source to admit that the Europeans were right, that they are ahead.
Let us end this stupid, emotional and utterly vapid debate about the state of the economy and focus on what matters: quality of life. The economy is finally stable. Like Europe, we have the resources to make life better for those who work and for those who do not work. We have the resources to fix our bridges, to build new railroads, to provide healthcare to everyone, to ensure that those willing to work will eventually find a job that will provide a decent living, and to ensure that those who cannot or do not want to work will not be condemn to the oblivion of homelessness and marginalization that will demobilize them from the work force.
We have a stable economy. What do we do about life? Forward, march!