You can take the mediation of global warming off the table as a necessary drag on the economy. Global warming is apparently over. The same data points that scientists used to prove its existence in the 1980's and 1990's - the 300,000 daily global climate measurements performed by the National Oceanic and Atmospheric Administration (NOAA) - have, since early 2006, showed a striking reversal of the warming trend - a trend that had actually come to a halt about 10 years earlier. Since early 2006, average global temperatures have fallen so fast that they are now at levels not seen since the 1980's. The surface of the Arctic Ocean has once again frozen completely from Russia to Canada - but at an earlier date than the last several years' freezes. Using the most comprehensive set of climate data on the planet, scientists were correct in the past on their pronouncements about the existence of global warming. The same data set now tells the same scientists that global warming has been replaced by global cooling.
A Darker Future For Us
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But there's no doubt that the new president—Barack Obama or John McCain—arrives at a crucial juncture and not simply because the financial crisis seems so unfamiliar and threatening. It is not just domestic but global in scope; managing it will involve economic diplomacy as much as economic doctrine. As important, the great forces that propelled the economy forward for the past quarter century, fed by disinflation and the accompanying rise in personal wealth and borrowing, have clearly spent themselves. If the economy is to retrieve faster growth in the future, it will need to nurture new sources of advance.
Given the scope and scariness of the financial crisis, it has already stimulated massive government intervention—and there will be more. But there is a parallel danger that too much intervention, or the wrong kind of intervention, will suppress the impulse for expansion, investment and risk-taking. There will be scapegoating and plenty of plausible targets. But if the reaction and retribution, in the form of new regulations and taxes, are too repressive, they could also undermine the prospects for growth. For better or worse, the next president will sit at the eye of this storm. To advance American affluence will require the right balance between the past and future.
Adapted from “The Great Inflation and Its Aftermath: The Past and Future of American Affluence” by Robert J. Samuelson. © 2008 by Robert J. Samuelson. To be published by Random House, an imprint of the Random House Publishing Group.
© 2008
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