Wednesday, October 22, 2008
To Save the Economy, Turn East – John Kerry’s good idea
By Bernie Quigley
- for The Hill on 10/22/08
As the American economy goes the way of Iceland, technicians daily suggest new initiatives, and not just Keynesians or free marketeers like Ron Paul, but Chaos Theorists with more exotic ideas like the Black Swan theory, which warns us that the end of the world is possible - because anything is possible. Throughout, almost none have come up with practical ways to deal day to day as we roll into the future.
But NYTs columnist Tom Friedman has. And he has been relentless in keeping the stick on the ice. Issues of economy are about work and the way we work and our attitudes toward work will bring us through as they always have. Friedman is a practical cat, not driven by ideological drivel, but with a pragmatic approach to issues and consistently he has looked to India in the global economy, seeing a friendship there that could awaken America’s flagging work ethic and bring a vigorous new working partnership in which both our nations could thrive.
John Kerry, the Senator from Massachusetts, has recently reflected some of these ideas in an essay in the Asian edition of The Wall Street Journal.
Kerry also calls for closer cultural ties with India. The 2008 Pew Global Attitudes survey conducted this spring found that 66% of Indians had a favorable opinion of the United States, while 69% believed that U.S. foreign policy accounts for India's interests in last year's Pew survey.
Kerry sees in an Indian-American relationship advantage in foreign policy. But he also says, “U.S.-India relations must be about more than exchanging nuclear fuel or technology. The next president must work to achieve broad-based cooperation that reflects the shared principles, shared threats, and ever deepening ties between our two economies and societies.”
It stuck in my mind because recently I’d been driving through the old neighborhoods and found myself in a small city near Boston, one built after the great crash of 1837. By 1860 the economy was booming again and virtually every stone and brick house in this city would have housed an Irish family, some by then into their second generation, but most all of whom had arrived since 1840. The presence of the Irish in Boston changed the city to the point where it was considered an Irish city a hundred years later. But today, prominently displayed in the grocery store window of a recent immigrant was a large poster of Ganesha, the child of Shiva and Parvati with the head of an elephant, known in India as the Remover of Obstacles.
I felt it was perfectly natural there; a kind of homecoming. The Irish have all become Americans by now, and here was an image the earlier Transcendentalist poets and their political friends - Emerson, Thoreau, Bronson Alcott, Mary Moody Emerson, Theodore Parker – would have been perfectly familiar with, as they were fully inspired by Hindu influences. To the point that, when Emerson published a poem called “Brahma” in The Atlantic Monthly, the oldest New Englanders began to be called Brahmins.
If Kerry wanted to expand the India connection, there couldn’t be a better place to start than Boston and the New England regions. And there couldn’t be a better time as now we are at the break point of the old and the springpoint of the new.
The recent financial troubles bring a change in the world and if the contours of history are followed closely, it can be seen as a familiar change, although there has been little discussion of this in the daily press. But Joe White at The Wall Street Journal has been making relevant points.
“Baby Boomers have pumped up the global economy with their profligate ways for nearly two decades,” he writes. “It's been a great party. Now the music's over.”
But what Baby Boomers of all persuasions have done, he writes, without dispute and to an unprecedented degree, is spend money instead of saving it. During the 1990s, Baby Boomers accounted for about half of all consumer spending in the U.S., according to a recent McKinsey Global Institute study.
Baby Boomers are rounding into the final laps of their careers, says White, largely untested and unprepared for what could be the worst economic crisis in their lifetimes. The sluggish 1970s and early 1980s overshadowed the college years and early work lives of the bulk of the Boom generation. But with a few mild hiccups, it's been easy riding since then. Till now. Now the Baby Boomers are running out or cash.
And running out of options: “Some economists and demographers say the Baby Boomers themselves are driving the current turmoil.”
The problem is, there’s so many of them (of us). 79 million people born between 1946 and 1964.
"This is like winter coming,” Harry S. Dent, an author and consultant who says the U.S. is headed for a slump that will last until 2020, tells White. It will take that long for the financial wreckage from this boom-bust cycle to be cleared away and for the 79.4 million strong “Millennial Generation” -- most of whom are still in high school or college -- to enter adulthood and start buying homes, cars and gadgets of their own. “It happens once every 80 years,” Dent says of this sort of demographics-driven economic cycle. “It's going to be difficult.”
Unlike many economists, Dent and the demographers he talks about converge economy with culture and see a greater picture, because as some historians have written in the last 15 years, historical periods are made up of four-generation, 80 years periods. It is this that Dent refers to when he says that it happens every 80 years.
Briefly, the first postwar generation (Eisenhower) builds a matrix for the economy to grow. The second generation (Boomers) build the economy and the third generation (Gen X) fulfills it. Then in the 60th year it begins to die. If you look to the previous historical period in the U.S. (1865 – 1946), the culture began to sag in 1925 and Wall Street crashed in 1929, the 64th year and the end of the first three post-war generations. In the previous historical period (1776 to 1865) the great depression began in 1837, the 61st year into the cycle. As all Boomers know, the historical period is now in its 62nd year because we are all 62.
This could go on longer that Dent says. The honored tradition in the past historical cycle was for the man of the house to do the right thing and die at around age 60, leaving a widow to live a little longer. But the boomer generation has quit smoking and drinking and all the bad things, works out at the Y with a personal trainer, eats tofu and does tai chi. Men and women both could go on indefinitely. Or at least for 25 more years. That is a long time for the general culture to carry 80 million unproductive people. My next door neighbor is 107. The lady up the street who just passed away was 111.
Dent creates a practical picture, one based on generations and the demographics from which economy evolves. What becomes clear is that at this point – the 60 year break – it is not a case of economy rising and receding but of one historic period ending and another entirely different one starting again in ten or 15 years. That is exactly what happened in the last historic cycle. The old world ended in 1929 and a new world began in 1945. And that is exactly what happened in the previous historical period. The old world ended in 1837 and a new world began in 1865. And that is exactly what is happening today. The old world ended in 2008.
It will take awhile to begin again.
The next President may be the least fortunate as it will take awhile for the realities of the new economy and culture to sink in. By 2012 we may begin to gain perspective.
Of the last two cycles, it is questionable as to whether or not the federal government under FDR had any important impact on the economy. Some say it federal intrusion made it worse. It is clear however that the economy only awakened again after World War II; that is, war cured the economy. This should be studied and considered.
The earlier cycle where federal intrusion was minor in comparison had more auspicious results. And the reality is that the world we live in today here in New England started with the crash of 1837. To dig out, it required a massive influx of new citizens – millions of them – from Ireland to begin a new world on top of the old world and visions of a new ways of work on top of old bromides. New work, new culture, new ways of doing business resulted and created a new America. Such an influx of new citizens this time from India – millions of them – might do the same today.
New York mayor Mike Bloomberg has made the point again and again that immigrants have always been the lifeblood of American progress, wealth and creativity. They bring new attitudes. They leave the old behind and awaken the new. When new people come here they change and we change. The millions of Irish Catholics who arrived in Unitarian New England in the 1840s overwhelmed the states, but they were later relied on to fight in the Civil War. The Protestant business class eventually fled when they got the upper hand, as Prescott Bush and his class did, to Texas. But in three generations his sons would embrace Catholicism, the core of contention between their classes since 1558.
India has population issues today just as Ireland did in 1840. A couple of million Hindus working at all levels of the economy would have a cheering effect and a positive influence here in New England. And there would be little culture clash between Hindu and Christian up here as we don’t get that fired up about those things.
And given the history of the Brahmins and the Transcendentalists, it is not exactly the same as going to an alien and hostile place as the Catholics of Ireland who sailed to Boston did. Emerson’s aunt retained the Vedic texts in her library, Thoreau argued the veracity of Krishna’s advice to Arguna on the field of battle in the Bhagavad Gita and Emerson and Thoreau went frequently to Alcott’s kitchen for discussion and study of the Hindu texts. The Ganesha poster seemed a harbinger. Maybe it is, to paraphrase Chief Joseph, that the spirit of the Brahmins still walks among us.