“May you live in interesting times,” says the old Chinese curse. “May you live in interesting and changing times” may be more germane to our modern era.
Our planet is increasingly governed by economic upheavals, and absolute truths are shifting. Nothing is exempt. Indicators that we formerly relied upon as beacons of economic health have become suspect. Unemployment stays stubbornly high even as working-age populations shrink. House sales continue to stagnate even as mortgage rates sink to historic lows. And inflation, which should be rising as governments print money while keeping interest rates low, is essentially flat.
It is becoming clear that what was once true is no longer, that previous paradigms and theories formerly treated as absolutes are now suspect. In the face of severe economic stress, new solutions must be tried, new options explored. In a word, we must change. Supply side theory is bankrupt, and deregulation is now proven a corrupting force, but throwing Keynesian solutions of governmental intervention at the crisis has proven ineffective as well. In a world where vast amounts of government debt are strangling wisps of growth before they have a chance to become established, changes are being proposed, and implemented, on a scale hitherto unimaginable.
Government, in the form of providing services, regulation, and a stable money supply, is necessary, but austerity is the new byword. Wages for public sector jobs are being frozen, or even slashed in the face of ever-shrinking tax revenues. And revenues must somehow increase; paying for services by borrowing and printing money only works for so long before the sole outcome is rampant inflation. Slicing and dicing budgets rather than increasing funding leaves crucial needs ignored and perverts the purpose of government. It is penny wise and pound foolish to defer maintenance, or eliminate early intervention; the eventual price tags to repair what’s been broken will always dwarf today’s cost.
The changes are worldwide. In the United Kingdom, for example, the Value Added Tax is rising 14.2% on all goods. Across Europe, retirement ages are being pushed up, in France, from 60 to 62, in Germany, from 65 to 67, in the U.K. from 65 to 66. Old formulas for retirement and other social welfare programs are being examined to look for new efficiencies without removing the safety net that they represent. The phrase “developing economies” is quickly becoming a misnomer as national economies in Latin America, Africa and Asia now represent 50% of the world’s economic output, with that percentage increasing annually. Even the unquestioned truth of inexpensive Chinese labor is being upended, as China’s one-child policy is decreasing the size of that labor force even as more international companies move to exploit the heretofore seeming unlimited supply.
The changes that are already happening elsewhere will make their way to the U.S. Here, immediate problems that must be addressed include the burgeoning federal deficit, state budget crunches, and looming shortfalls in Social Security and Medicare at a time when more and more people are becoming age-eligible and reliant on these programs. While we are not perched on the edge of bankruptcy like Greece, interest on the government’s debt plus funding for two wars is eating up an increasing share of tax revenues, and there is unwillingness from either side of the aisle to discuss tax increases to pay for these additional costs, or to shore up the fortunes of Social Security and Medicare.
Taken individually, each of these problems is substantial; together, they represent a reckoning for this country unparalleled since the Great Depression. And yet, in this country, in the face of rampant need for change, we have instead complete and total paralysis. Evidently, while we all agree that something must give, apparently what we mean is that someone else must give. Eighteen months into an administration elected on the promise of change, the drums are beating for the heads of those in charge—the chant seems to be that change is not fast enough, painless enough, and what there is isn’t moving in the right direction.
This is the conundrum: apparently, we want instantaneous and painless solutions for problems that have developed over decades, and yet we are unwilling to participate in the cure. So President Obama shoulders the blame for accumulated problems stemming back through three Bush, two Clinton, and two Reagan administrations. These problems didn’t happen overnight, and can’t be resolved by flicking a switch.
A great deal of energy is expended playing the blame game, all of it wasted. We didn’t arrive at this point through the actions of one person, or one party, and we won’t cure any of these issues by sticking in our toes and insisting that ours is the only way. Whether we like it or not, we all participated in creating this crisis; we are all responsible for solving it.
The Chinese have it right; this is an endlessly interesting time, and we are facing incredible challenges. Change must come, whether we embrace it, or fight to prevent it. Change is coming: we should treat it as a blessing, not a curse.