Economic Inequality. Two economics mavens debunk the "disappearing middle class" theory of income distribution in America. The reality is that the top one percent has in the past generation separated itself from even the rest of the top ten percent. Vast fortunes driven by the Wall Street and technology booms created a class of Gilded Age super-rich. This has been called, with some overstatement, a "winner take all" society. Think of the visibility and monetary potential between the gold and silver Olympians. Finishing 1/00 of a second behind can mean finishing at 1/100th in the post-race fame & money stakes. Meanwhile, government spending soars and one-sixth of American consumer spending--"benefit spending"--is now funded by taxpayers.
Green Energy. Hudson Institute scholar Alex Alexiev informs us that European countries hitherto ga-ga over Green economics have sharply pulled back, finding that Green Economics lead to, well, red ink. George Will sees the Green Bubble imploding on the economic reality of recession.
Corporate Corpulence. "To Fat to Fail" is pundit Dan Henninger's tart description of Team Obama's corporate economy, symbolized by GM:
After GM's bondholders last weekend refused to answer the bell for another round with Uncle Sam, the White House put out a statement: "As a result, the President has deemed GM's plan viable and will be making available about $30 billion of additional federal assistance to support GM's restructuring plan."
Read that sentence again, slowly. It holds what look like the keywords of the American future: the president, deems, viable, making available, federal assistance, support, restructuring plan.
An utter absence of private sector experience among 44's top advisers and aides is no coincidence:
Without exception, the Obama people with responsibility for the private economy come from a lifetime in politics, public administration or academia.
Besides Mr. Obama himself, the list includes Tim Geithner, Larry Summers, Peter Orszag, EPA's Lisa Jackson (16 years with EPA), Commerce's Gary Locke (zero private experience), or Transportation's Ray LaHood (14 years in the House). The bio for Agriculture's Tom Vilsack says he "has served in the public sector at nearly every level of government." How can the private sector -- especially the world of risk capital, sweat equity and start-ups -- be anything but an abstraction for this group?
Many of Mr. Obama's supporters surely thought this young, dynamic generation of public leaders would elevate the hip, cutting edge of the U.S. economy -- nanotechnology, genomics, robotics, even health and medicine technology. Instead, we've gotten the Old Economy on dialysis. General Motors has been commanded to restart aging UAW factories to output product on behalf of the administration's hybrid-car obsession. Where's the New Economy in any of this?
Systemic Risk: Fed's Ex-Chairman Speaks. Here is a link to Alan Greenspan's June 3, 2009 address to the American Enterprise Institute on systemic risk. In an extraordinarily thoughtful--and brief (just over 4 pages) address, AG explains the problems of recognizing and regulating systemic risk, and the unavoidable trade-off between level of risk and potential gain/loss. He adds a reference to an earlier statement, eerily prophetic:
I noted in January 2000 before an assemblage of the Economic Club of New York, that
“When we look back at the 1990s, from the perspective of say 2010, the nature of the forces
currently in train will have presumably become clearer. We may conceivably conclude from that
vantage point that, at the turn of the millennium, the American economy was experiencing a
once-in-a-century acceleration of innovation, which propelled forward productivity, output,
corporate profits, and stock prices at a pace not seen in generations, if ever.” I then countered,
“Alternatively, that 2010 retrospective might well conclude that a good deal of what we are
currently experiencing was just one of the many euphoric speculative bubbles that have dotted
human history.” Finally, I cautioned, “And, of course, we cannot rule out that we may look back
and conclude that elements from both scenarios have been in play in recent years.” The last
alternative is still on the table.
Bottom Line. A perfect storm of pubic and private sector failures, coupled with an historic, iconic President and a fawning mainstream media, has laid the foundation for seizure of the commanding heights of the American economy by politicians in Washington, DC. Barring a tectonic counter-shift within this term--hard to envision but not impossible, coupled with a resurgence within a unified GOP that is even harder to envision--an irreversible Europeanization of the American economy is in store. Such will be partly socialist (health care) and partly corporatist (public-private enterprises with the public partner given senior status). Joseph Schumpeter's famous prophecy in his 1942 classic, Capitalism, Socialism and Democracy, may at long last come true: Capitalism will be destroyed by a class of intellectuals created by, and supported by, the prosperity it generates.
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