An Alternative Policy for The Economy

I am frankly confused. I favor the President and find him credible. But I do not know if our crisis is surmountable because of the division, vitriol and lack of ability to get things done. I rarely quote things at length but the following strikes me as sensible.


f I suspended my instincts about how the crisis would ultimately be resolved, and make an assumption that our political system could rise to the occasion—an assumption of historic proportions—what would Washington have to do?

Most important, it would have to set a few simple goals, such as reaching a ratio of debt-to-GDP of, say, 60 percent within a decade, with interim targets along the way. By way of comparison, it is close to 70 percent now. Washington would have to establish a process that would kick in when the U.S. missed its targets, a process that would result in a combination of raising taxes and cutting spending across the board. That mechanism would have to be established in law and be subject to override only by, say, a recommendation of the president and a positive vote of two-thirds of the Senate.

To meet the targets, it would be necessary to establish new sources of revenue. Start with a national sales tax (refunded for low-income families), which, according to the Tax Policy Center, a joint venture of the Brookings Institution and the Urban Institute, could produce some $400 billion annually by the end of this decade ( $200 billion this year.) Add to that a gasoline tax, one that would have the additional benefits of cutting CO2 emissions and reducing imports and hence boosting national security. A $1 per gallon tax could produce over $3 billion per week, according to the Congressional Research Service (but it could start lower and eventually get beyond a dollar.) Both of these taxes are in effect in virtually all major developed nations. We would need health-care reform that holds down spending, particularly with respect to Medicare. Those with higher incomes should pay more for Medicare and Social Security as a result of a means-testing process.

We would also need a major revamp of the tax system to favor entrepreneurial activity, the major creator of jobs (and hence income, and hence more revenue and less subsidy payments from Uncle Sam.) This means special incentives for starting a business, such as easy write-offs for initial investments, and permanent tax credits for R&D.

These measures are not the entire universe of policy requirements, and some may prove infeasible. But they illustrate the arena in which we must play, and by comparison they show why the budget announced on Monday is a sham and why, in the end, it may take China and others to force us into doing what we cannot do ourselves.

Jeffrey E. Garten is the Juan Trippe professor of international trade and finance at the Yale School of Management, and served in economic and foreign policy positions in the Nixon, Ford, Carter and Clinton administrations.




COMMENT ON: Why Obama Is (Finally) Taking on Wall Street

The story is not about how many cheers the President should get or about a populist makeover. The measures the President advocates are merely part of a total package that had to include exactly what has already taken place. When history is written, Obama will prove to have been largely correct not only in substance but in timing. The commentary on his Presidency has not proceeded on this premise and has therefore had more the character of fish wrapping than sage analysis, whether from left or right

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pattern language, politics

COMMENT ON: Obama Foreclosure Plan Falling Far Short Of Targets

Sad but true, I believe. Dispersed homes will never recover their “value”.

Economic viability in the future will be five times greater for those living in close proximity in communities that integrate a good deal of what is now all over the map. Another way of saying this: Energy costs are five times greater in dispersion than in denser areas.

Both the dispersed (metrosprawl) model and the commute-by-car, do-everything-by-car models are unsustainable. Ultimately it may be less expensive to redesign and rebuild communities from scratch, than try to continue propping up today’s default sprawl.

This is the underlying reason for the crisis we are in. Remember we said we needed to move to a post-oil economy?

Current efforts to tie recovery to the resuscitation of the automobile and housing markets are unlikely to do more than sputter. Meanwhile the vision of a truly sustainable economy can be found in the thought of thinkers like Christopher Alexander.


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pattern language, politics

Job Openings At Record Low: 50 Percent Fewer Than 2007

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UPDATE: I would normally receive a notification if Huff had published this comment. Didn’t get one.

The reason job openings are low is because the market is changing radically.

The jobs of the future have been largely beyond the radar of planners or are just coming into focus.

The jobs of the future will depend on the evolution of new concepts of settlement, zoning and service.

We are moving from an “institutional” society to a more community or neighborhood-oriented one. We are also moving to a more security-conscious one and one which will place a premium on safe and person-friendly environments. Scale is the key. Adequate density. Current metrosprawl densities are impossible economically.

It is the market itself that is making the continuation of an automotive, metrosprawl world less and less sustainable.

The change that is coming will happen as folk free up their mental and financial resources to rebuild our society physically, conceptually and with a more personal face.


pattern language, politics

COMMENT ON: U.S. Growth Prospects Deemed Bleak In New Decade By Economists

Prospects for growth are bleak because growth is not the problem. It’s the oil, automobile and detached-home philosophy.

That idea becomes inexorably bleaker whenever people talk as though that is what we want to revive.

It will not happen.

We have already won the economic war worldwide in a sadly ironic sense. All the world has bit on the obsolete American formula — the Henry Ford one — hook line and sinker. We are simply farther along on the evolutionary curve to obsolescence.

A single observation makes the point. The economic viability of a population dispersed as metrosprawl, living in detached homes and driving everywhere, oil-dependently, is one fifth that of a population living in an urban setting. This economic viability would increase to the extent that human settlements began to became denser pedestrian neighborhoods with a growing mix of essential institutions and commercial enterprises within walking distance. Linked by public conveyances.

Recalibrating and reconceptualizing the basics of community and pattern language are the keys to future economic viability. Growth will refer to human beings.

The new jobs that will result from recalibration will replace the jobs lost trying to push an economy that will not work now or ever again in the future.

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COMMENT ON: Will The Unemployment Disaster Be Obama’s Katrina?

UPDATE: I have taken to this comment format because Huffington Post has consistently posted my blogs there so as to get no notice, since notices are tied to dates of the original posts.  In addition my status there is clearly in the cellar. Authorship if 15 books and achievements over the years are apparently insufficient to place me among the bloggers they care to feature. I have vacillated between polite rejoinders and borderline protests, but today I am moving to protest period, though it will do little to change things. The comment below was, as far as I can determine, NOT posted at Huffington Post. That is an obvious and to me unpardonable instance of censorship. I shall continue commenting there and testing their biases. I wish I could say I take satisfaction in any of this. I do not. It lowers Huffington Post in my estimation and that is too bad, because it now joins other progressive media which have shown themselves to be unsupportive of the President, immature in judgment and with little or no longterm view.   If Huffington Post poses the comment below I will happily withdraw this update.

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The carpathon continues.

Not a day a day goes by without another (gnat) arrow at the heart of the President. There is a basic misunderstanding at work. Things were never going to happen overnight and the order of deeds was and is utterly necessary.

The order goes this way. ONE: Solve the free fall economy. DONE if three and four occur.

TWO: Set up the health care process — en train de faire.

THREE: Redo the War on Terror — in progress, Huffleaks and all.

FOUR Jostle the business community into an aha moment when it begins to get serious about what products and services will be needed for a new and sustainable way of living.

This order of events is what the spoiled, we-want-it-all-now folk who trash the President ignore. We are facing an entrepreneurial necessity — “connect the dots”. The final result will a post-oil economy with a recalibration of the elements of settlement and community. Little of this is taken seriously in these precincts.

So — the daily knife continues. The carpathon goes on. Meanwhile the President stays the course and brushes it off.


pattern language, politics

Comment On: Memo to Warren Buffett: Put Down the Pom-Poms and Tell Us the Truth About the Economy

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One constructive option would be to stop talking about the market working as if the market was what worked in the past.. It is because confidence in the stability and direction of that market was shaken that we got where we are.

The behavior of the greedy kicked in but who said the continued creation of metrosprawl, single family homes and our ad driven macho automobile economy was still a viable market concept?

It isn’t.

Viable would be a revolution in design and planning and architecture around a future worth investing in. There is little featured in HuffPo about celebrating real change. I see a good deal of populism lite wed to an obsession with who’s being trashed and who is first. The first is distraction. The second is old economy narcissism.

We need constructive effort to create a more democratic economy and more ordinary people involved in the solutions that will create the jobs and institutions and environments of the future.

For more on this please check out https://stephencrose.wordpress.com/pattern-language/

At least Warren Buffett knows that to get where we need to go we need new businesses.