Sweet Orange

According to Pulitzer Prize-winning columnist Thomas Friedman, one of the main problems facing the U.S. is an “I’ll-Be-Gone, You’ll-Be-Gone” attitude about our economy–and the environment. For example, he states that we have been using the same unsustainable accounting practices for both: We have been underpricing risk, privatizing gains and socializing losses, and this is why Bear Stearns and the polar bear are becoming extinct at the same time.

As Friedman sees it, the root of this problem isn’t solely with current government policies:

We don’t just need better government, we need better citizens….We need to make leaders understand you can ask me to something hard.

Friedman see much of the anger at our current predicament as “unfocused” and an unwillingness to make a shift away from the familiar but unsustainable practices that have lead to the current difficulties. Friedman says we are following situational values instead of sustainable values.

Goldman has been the poster boy for banks behaving by “situational values” - exploiting whatever the situation, or rules that it helped to write, allowed.–NY Times News Service

Now brace yourself, because here is an example of the type of immediate change that he thinks we should be willing to make for the long-term benefit: A dollar gas tax.

Forty cents would go to deficit reduction, 40 cents to health care (which would also help to reduce the deficit), 10 cents to subsidize those who can’t afford health care, and 10 cents to those who have to drive long distances.

As Friedman sees it, these measures would help to reduce the deficit, improve the health of the dollar because we won’t be sending $250 billion overseas, and correct an energy policy that is currently empowering some of the most corrupt leaders in the world.

OK, I know that a gas tax is a third rail in politics, and I imagine some of you are muttering some unpleasant words just at the mention of a gas tax. But as Friedman sees it, we cannot continue with an economy based on the expectation of continuous withdrawals without deposits.

Here are some other solutions that Friedman thinks will help our economy:

• Health care reform will allow us to compete globally.
• Investment in energy technology will allow us to compete in the predominant job markets of the not-to-distance future.
• Education in energy technology will allow us to build a better economy.

Sources:

• http://www.nytimes.com/2009/11/22/opinion/22friedman.html?_r=1&em
• http://www.charlierose.com/ (under Web Exclusives)

Thomas Friedman at Davos Economic Forum

According to Pulitzer Prize winning columnist Thomas Friedman, our problems in California are just a preview of the problems that the rest of the country will face. Friedman sees U.S. problems as stemming from the following:

• too much money in politics
• gerrymandering of political districts
• Internet use which “at its worst provides a home for every extreme view and spawns digital lynch mobs from across the political spectrum that attack anyone who departs from their specific orthodoxy.” He also states that “at its best, [Internet use] provides a check on elites and establishments and opens the way for new voices.”
• a permanent presidential campaign
• U.S. business community that has become so global that the business community does not feel  a commitment to local areas or even the U.S. as a whole

Friedman has also stated that much of our problems come from the failure of our leaders–and the public–to think and act for the long term. He calls this our “I’ll be gone, you’ll be gone” attitude toward the economy and the environment. According to Friedman, we have been using accounting practices for both our financial system and the environment that under price risk, privatize gain, and socialize losses.

For video interviews with Thomas Friedman, see Friedman’s New York Times webpage.

Sources: Thomas Friedman, “Advice from Grandma“; The New York Times; Charlie Rose

Well, we had stimulus spending and some say that we are starting to see an economic recovery. However, others are questioning this since unemployment is still so high. Peter Orszag, Director of the Office of Management and Budget, explained it this way during a Charlie Rose interview.

Orszag stated that he sees the economy as improving but the unemployment rate will remain high for some time to come. This is in accord with most economists’ belief  that employment is a lagging indicator in a recovering economy–the stock market might go up, businesses may see improvement, but hiring is put off until the recovery has long been underway.

However, Orszag said that the current unemployment rate is 1.5% higher than would be expected in a more traditional recession. He listed two factors for this: First, pensions are largely a thing of the past; more U.S. citizens now depend on a 401K for their retirement. However, with the fall of the stock market, the amount in 401Ks has decreased drastically, and many, by necessity, are postponing retirement and staying in the workforce.

Second, in past recessions, many moved to other locations to accept a job offer. However, this time around, plunging house prices make it difficult for homeowners to sell their homes and seek employment elsewhere. The result is that fewer of the unemployed see moving as an option in this recession than in past recessions.

Orszag also said that without the stimulus spending the economy and the job situation would be worst than it is now and that the affect of stimulus spending was designed to reach a peak at the end of this year and early 2010.