America's economic tragedy

There’s not much point in my lamenting the state of the US, since commentaries are available from far more able individuals.

Brad DeLong’s recent conference presentation provides a cogent and insightful analysis of our macro-economic circumstances. To summarize: there were plenty of ways to prevent the housing meltdown from taking the entire economy along with it, there were even tools at our disposal to recover from the financial crisis, but Obama blew it (with ample help from obstructionist senators, ineffective advisors, and the Fed).

Why Obama messed things up so badly, allowing economic recovery to slip down, or perhaps entirely off, his policy agenda, mystifies DeLong, and it mystifies me. The good news is… well, actually, there isn’t any. We’ve dug ourselves into a hole from which it will be very difficult to escape.

Nicely complementing Brad’s article is this piece by Andy Grove about jobs. Grove observes that startups won’t solve America’s unemployment problem if “scaling up” happens offshore. He also notes that without government leadership and aggressive policies, such as tariffs on goods produced off shore, it won’t be easy to create jobs in America again on a significant scale.

This reminds me of something else that mystifies me: why has the US sat idly by as China uses massive currency intervention to drain off American jobs, instead of responding in kind with a tariff? Given the failure of the Obama administration to craft effective economic policy described in gory detail by DeLong, I’m not particularly optimistic about the prospects for “job-centric political leadership” advocated by Grove.

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