It's been nearly 5 months since I started DOTE. The traffic stats are very encouraging. The number of visitors has increased almost every week during that whole period, although there has been a great deal of volatility. But DOTE is still a minor league blog, and will remain so for some time to come. I am about halfway to my initial goal of 1000 real visitors a day (as measured by Google Analytics).
I want you, my readers, to be very well-informed, even if you are relatively few in number. So today I will lay out The Facts Of Life. A great debate is going on at present, not least because it's an election year. Here are the opposed views—
I deliberately wrote up these opposed views to emphasize what they have in common: we're in a tight spot, but after we take actions X, Y and Z, an era of strong economic growth is assured. Krugman, who is a strong believer in option #2, likes to cite the era after World War II, which was the last time we had anything like the public debt we have today. I too will rely on that comparison. Let's assume the economy gets back on its feet by 2015, via path #1 or path #2. The economy would then be poised for take-off.
To keep things simple, I will ignore some obvious but very important differences between 1945 and 2010: our huge private debt, the fact that previous growth was driven by bubbles in the stock & housing markets, the fact that a net zero jobs were added in the private sector during the last decade, our enormous wealth inequality, etc. I will simply pretend these problems don't exist.
I will further ignore the fact that we are an Empire in Decline, and so will disregard our political paralysis & corruption, the dominance of 6 Big Banks in Finance & government decision-making, the increasing separation of the Real World (where you and I live) and what I call The Money World where Jaime Dimon lives, the destructive trends (e.g. unaffordable health care, lack of innovation) in every aspect of American life—that is to say, I will ignore almost everything I write about daily on this blog.
Having swept all these problems under the rug, the question then becomes—
Remember, the standard assumption underlying both view #1 and view #2 states that the answer to this question is Yes. But we have good reasons to believe the answer is No, to wit—
This list is seriously incomplete. I put it together off the top of my head. I'm sure many of you could add other factors I left out. For example, we do not control the supplies of many elements (e.g. lithium, phosphorus) that are essential to our economy. Mexico's oil exports are going to dwindle down to practically nothing in about a decade at current decline rates. If you think we have an immigration problem now, what about then, when Mexico, without the oil revenue, becomes a failed state?
An economist would no doubt say that I have underestimated the technological know-how that could be applied to solve many of these problems. And my response would be Show Me. But no one can demonstrate what does not exist.
Others would say that we simply haven't created the right incentives (e.g. a carbon tax) to fix the global warming or other problems (e.g. liquid fuels scarcity). Growing economies need more and more energy. It is pure fantasy to believe that we can eliminate fossil fuels to the extent required (by climate change or peak oil) and still produce more and more energy to support economic growth (regardless of what Al Gore says). If I have to choose between Physics and Economics, I choose Physics, despite fantasies economists harbor that the two fields of study are comparable.
These are The Facts of Life. If you've made it this far, dear reader, I believe you are now well-informed. As you watch the video below on the great debate between spending and cutting back, bear in mind everything I've said here.