Let’s tick through three pieces of bad news from the last week.
(1) David Smick has a bracing essay
about the economic perils that await the next president. Actually,
bracing isn't quite the word for it. Maybe terrifying is better:
The political party that controls the White House after January could, four years later, be out of power for a generation. The economic challenges are that daunting. . . . The risk stems from something more fundamental: The globalization model of the past 30 years is cracking up. And there appears to be no new model to replace it.
What has Smick worried is this: Global exports are
falling everywhere; not just China, but 12 other countries are also
manipulating their currencies against the dollar; and cross-border
lending has dried up. In sum, the era of globalization might be over.
And, as Smick points out, it’s waning before we've come up with a system
to replace it.
If Smick is right, then in the macroeconomic sense
it would matter only slightly whether Obama or Romney is president
because neither has any idea as to what will refill the hole in
America's GDP that’s going to be left by the shriveling of our financial
services sector which, at the peak of globalization, accounted for 40
percent of U.S. corporate profits.
But don't worry. It gets worse.
(2) As Smick was writing, Tom Edsall pointed to a hypothesis put forward by Northwestern economist Robert Gordon, which boils down to this: The era of U.S. economic growth is over.
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