The Carlisle Mosquito Online

Friday, October 22, 2010


A country divided

The sense of crisis is real. We are doomed. Days before the election we hear the shouting everywhere.

Our forebearers had faith in the fierce power of ideas. They crafted a constitution and set of laws that tested the best of minds. They intentionally checked the undue influence of the individual and the powerful, deliberately building in both inefficiency and delay in our governance. And they put tremendous faith in reason, discourse – civil and raucous – and compromise. From this process we Americans generally believe that the middle ground is the best solution.

Today we are tested. Anger and distrust is afire, not new, yet unleashed. The challenges are large: a Great Recession with stagnating long-term unemployment, rising obligations, impending climate change, growing gaps between rich and poor, slipping educational attainment and anemic growth.

The passion of the debate is out in full force. “Cut the deficit,” “stimulate the economy,” “cut taxes,” “tax the rich,” “encourage innovation,” “invest in energy and education,” “eliminate waste and fraud,” “support the unemployed,” “protect our jobs,” “tough it out,” “stop immigration.”

This election presents two very different views of the United States. It echoes the early debate between Jefferson and Hamilton. A century later, both Roosevelt presidents greatly increased the role of government that was later checked by Reagan and the reassertion of the belief in free markets. And today, true to our heritage, we still argue about these contrasting visions of our political economy: agrarian independence and self-sufficiency, or managed market capitalism.

We didn’t fall into a depression, yet there is no real recovery. The Great Recession is much worse than many thought, the persistence of underemployment is corrosive to our civic society, xenophobic pressures mount and the engine of growth is foggy at best.

When Obama took office in January 2009, most economists thought a large stimulus package would get the economy back on track by 2011. Unemployment would peak around 9% and recover with faster GDP growth (4%) by 2011. Four months later it was clear that the housing collapse was much larger than anticipated and the banks in worse shape. Yet many economists still expected a V-shaped recovery; unemployment would peak at 10% and bounce back quickly to the 5% range by 2011 with strong growth (4.8%) as companies ramped up their investments and confident consumers started buying again.

How could we be so wrong? We have broken the Great Recession, there is very modest growth and companies have cash to invest. But business investment has stalled, our animal spirits are low, and there is no sputnik moment. It appears that we are stuck with persistently high unemployment and little prospects for robust growth. Many dour economists are suggesting that GDP growth will stay stuck in the 2% range with unemployment over 8% for many years to come. The discontent of the discouraged middle class is erupting. “Throw the bums out!” The anger is palpable and the answers are few.

We need to confront our challenges and commit to real actions. The country did this with Roosevelt, Kennedy, Johnson and Reagan. Each era marked a shift in the delicate balance between the role of government and our body politic. We are here again. On one hand, we have a more activist leadership applying Keynesian interventions in a reluctant partnership with businesses and workers. Hopefully, curbing excesses and addressing problems creates a dynamic for growth. On the other, there is the more laissez-faire market-oriented Friedman approach that wants less government and the dynamism of the private sector to take us out of this mess.

The political and economic divisions are clear. The question is which is the best way to solve our crisis? History has shown that growth, innovation and the creativity of our economy depends on our sense of confidence and our willingness to take reasonable risks. The economy will bounce back, once we work off the bad debts and get the right job skills. We must find a way to believe again. This is very difficult for economists to grasp. We look at numbers, surveys and trends, and then realize that confidence has changed. Many feel that our behavior in the boardrooms, workplace, classrooms, over the Internet, airwaves, across party lines and in everyday conversation must change if we are to regain our confidence.

The election is about how we and our leaders take us out of the wasteland. Of course, we have to be ready to leave.

Carlisle Comments is a column that welcomes contributions from town residents on a wide range of topics. It is printed on a space-available basis. For possible submissions of no more than 750 words, contact Ann Quenin at

© 2010 The Carlisle Mosquito