The article compares the current US situation with the Japanese situation circa '90, and I think does a reasonable job. The answer is pretty much in the last couple paragraphs, and I think is also correct. We can argue all we want about "stimulus / no stiumulus / socialism / etc", but the real question is "what is the engine of growth"? I'd quibble with Samuelson that the Internet, high tech and finance itself were strong engines for US growth as well as consumerism, but there is no doubt that consumption based on rising asset values was a major part of our growth strategy. Where do we grow now??
Still, the operative word is "temporarily." Hannity is correct in
that serial stimulus plans become self-defeating. The required debt is
unsustainable. At some point, the economy must generate strong growth
on its own. Japan's hasn't. Will ours?Since the early 1980s, American economic growth has depended on a
steady rise in consumer spending supported by more debt and increasing
asset prices (stocks, homes). Just as the mid-1980s signaled the end of
Japan's export-led growth, the present U.S. slump signals the end of
upbeat consumption-led growth. But its legacy is an overbuilt and
overemployed consumption sector, from car dealers to malls. The
question is whether our system is adaptive enough to create new sources
of growth to fill the void left by retreating shoppers.
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