Zachary Karabell, author of Sustainable Excellence: The Future of Business in the 21st Century (2011-link), has a piece at The Atlantic (link) making a case for the “bright side” of falling off the so-called fiscal cliff. Not sure how much of Karabell’s argument I buy (especially the part about Mexico’s progress being reason for optimism; I have the opposite impression). But we should appreciate the attempt to take structural account of the US economy, so long as the structural argument is not used to argue against Krugman-style fiscal stimulus in the here and now. In my reading, Karabell’s account of US economic structure — the “shift” — is on target as a way of getting at the Krugmanian question, which I put this way: will the US design an actually thriving labor market for itself? An excerpt from Karabell:
The U.S. economic system is in the middle of structural shift. Tens of millions of workers, mainly men, have lost competitive advantage to less-well-paid workers around the globe and also to robotics and information technology that has made many 20th -century jobs unnecessary.
Whether the United States emerges on the other side of that shift as a prosperous, service-oriented, entrepreneurial, innovative society is the question of our time.
The pessimistic view says that without a currency based on something tangible, such as gold, and an economy based on something tangible, like manufacturing, the future is bleak. But this assumes that the only viable system is the one we had and that no possible alternatives could evolve.
Those views also put government in a central position as economic steward, which again was the case in the 20th century. Today’s federal government is hardly a hotbed of innovation and may matter less to our collective future than we assume.
The fiscal cliff, rather than dooming us, may reveal that government as an economic actor is less potent than all sides of the political spectrum assume. The economic future of America lies less with what Washington does or doesn’t do and more with what tens of millions of Americans, especially those under age 30, make of the future. With high education and literacy levels, as well as access to cutting-edge technology, the preponderance of these millions of Americans look to be crafting a set of new economies based on social media and software applications that are changing the way business is done and commerce is transacted.