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Henry Dubroff and John J. Huggins, in “From Great Recession to Great Reset” in today’s Perspective in The Denver Post (http://www.denverpost.com/opinion/ci_16039375), described the restructuring of the American economy that is occurring as a result of our recent financial sector meltdown. The authors view the loss of home ownership as a reliable investment whose growth in value can be depended on to finance future costs such as children’s college tuition and retirement, the decreased mobility due to a significant portion of homeowners owing more on their homes than they are worth, and the increased structural unemployment rate due to a long-term (or at least medium-term) downturn in new home and commercial construction, all conspire to create an enduring new economic context of slower GDP growth, increased savings, decreased spending-as-percentage-of-GDP, and decreased mobility.

Few would argue that some of these changes are not necessary and desirable in the long-run (e.g., increased savings and decreased reliance on consumer spending for economic vitality), and few would argue that increased structural unemployment is not undesirable (unless it was only the unemployment of people in a relatively smooth transition to new employment, which the authors argue is not likely to be the case in this scenario, in which the construction sector has around 25% unemployment, involving workers not easily positioned to retrain for the more robust communications technologies and health care jobs on the horizon). But what about decreased job-driven mobility and a slower growing GDP, two conditions that most economists would probably identify as undesirable? Are they really?

There are at least two silver-linings to those two interrelated clouds: 1) We need to transition into a more sustainable, eco-friendly, and, for both moral and pragmatic reasons, distributionally just global economy, which is going to have to place a higher value on ensuring that everyone has access to a modest means of sustenance than on the ability of some to achieve extraordinary heights of wealth and consumption; and 2) this country is in desperate need of a renewed sense of community, a renewed recognition that we are not just a collectiion of mutually irrelevant individuals, but are in fact a society of neighbors and fellow citizens, with a shared fate, shared challenges, and in a shared enterprise. The slower GDP growth in what is by far and away the most consumptive nation on Earth contributes to the former necessary global economic adjustment, while the decreased job-related mobility contributes to the latter necessary cultural adjustment in our own country.

The challenge we face is to transition into ever more sustainable and fair political economic systems, without compromising economic vitality to the point that we are only achieving a sustainable and fair condition of universal destitution. We need to create an economy robust enough to feed and shelter and educate and, in general, nourish the bodies, minds, and souls of the human population, but fair enough that it does not acomplish this for some by denying it to others, and sustainable enough that it does so in a symbiotic coexistance with rather than parasitic destruction of the natural context upon which our very existence depends.

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  • bsmull:

    I agree with Steve that there are is a silver lining with our “Great Economic Reset”. The decrease in mobility will cause more people to connect with their communities.

    As an “Urban Nomad” for the past 20 years, I’ve had 18 different addresses in 7 states. I am happy to have settled down in a lovely home and community in Jeffco. I am enjoying meeting new friends, sharing holidays with my neighbors and getting involved in volunteering for the community and schools. I want to have more solid roots planted and an increased sense of community.

    As fewer people are moving every 3-4 years, more of these residents will hopefully get involved to improve the business opportunities of our local areas. Maybe more people will become active in their school districts or local government.

    Less moving= More growing, cultivating and improving where you stay.

  • There are many benefits to creating more stable and enduring communities, that range from the pleasure of having life-long relationships with people who continue to live in close proximity, to having more eyes and hands involved in the difficult task of child rearing (how many adults now, in our disintegrated society, just walk by teenagers smoking, or otherwise engaging in self-destructive behaviors, without saying anything, because they don’t feel they have the right to?). Humans are not just factors of production; we are, rather, those whose welfare is to be served by that production, and if it is sometimes the case that economically less “efficient” arrangements, from a narrow market perspective, produce greater utility, all things considered, then we must pursue the path that leads to greatest utility (the broader concept) rather than merely greatest wealth (the narrower one).

    Research has shown that wealth correlates to happiness up until one’s basic needs and some minimal degree of financial security are met, after which increasing wealth has little impact on personal happiness. We need to strive to maximize our well-being, rather than merely our wealth, which means refining our economy (and our culture) to provide more opportunity for more people with less displacement.

  • Ray Springfield:

    The enigne driving post war growth was the American middle class. With the WTO, GAAT, and other trade agreements there is no way that can be sustained. Politicians from both parties have failed to tell the public that the price of globalization is long term serfdom.

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