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No one has epitomized our yo-yo economic thinking lately than Thomas Friedman, who followed a column urging let’s go shopping with another urging thrift. This is the dilemma du jour: which companies do we bail out, and which do we leave to drown?
Phrased another way, how do we have a smart recession?
The answer I think is pretty commonsensically clear: we bail out those things that lead to the future we want to have, and let the others paddle on their own.
Case in point: U.S. automakers. Are they leading us to the future? This is a no-brainer: one glance at their sales figures answers this question. If any question remains, consult The Economist, which states flatly that the future for automakers are how well they sell in India and China. Bad news, Ford and GM: China has fuel efficiency standards and India is implementing them. Turns out the years the Big Three spent opposing fuel efficiency standards in the U.S. were a bad career move and the argument that they needed low standards to be competitive was exactly wrong.
There’s a crowdsourced component to this as well. In these econocalyptic times, people are being more cautious with their money. There’s a commonsense logic at work, which is why people aren’t buying gas-guzzling American cars or cheap lead-encrusted Chinese cra- uh, goods. The econocalypse has forced people to begin thinking ahead and making the future part of their calculations. Now, if we can just extend this thinking into what sort of economy we stimulate going forward (and what kind we don’t waste our dollars on), the recession will not be another example of “a crisis is a terrible thing to waste.” Photo by oxmour via Flickr.
Thomas L. Friedman and I don’t always see eye to eye, but this recent editorial of his is right on:
When a person is addicted to crack cocaine, his problem is not that the price of crack is going up. His problem is what that crack addiction is doing to his whole body. The cure is not cheaper crack, which would only perpetuate the addiction and all the problems it is creating. The cure is to break the addiction.
He goes on to quote economist Paul Romer: “A crisis is a terrible thing to waste,” which pretty much sums up the reason we did a “historical pre-enactment” of the 2008 oil crisis in World Without Oil. Through the artifice of a game, we got to have the learning opportunity a crisis presents, without the crisis itself.
President Bush understands our oil addiction – he used the term himself, in a State of the Nation speech. As Friedman elucidates, what Bush doesn’t understand is how to cure addiction. After 9/11, he told the nation to go shopping while he worked up a pretense to invade a country with huge oil reserves. This is some kind of twisted War On Drugs approach to oil addiction: you occupy your dealer. The only thing is, the War On Drugs isn’t working either.
So now we have: This is your economy. This is your economy without cheap oil. Any questions? Artwork by ~~zorro~~ via Flickr.