In Sunday’s Seattle Times, I wrote about the so-called great reset that many thinkers, notably Richard Florida, argue will emerge from the Great Recession. My question was whether the ruling interests and long-embedded custom can be so easily changed. To be fair to Florida, he says this is a multi-generational process.
So far, however, I’d say we’re in a moment — it may not last long, but who knows? — that defies a sexy name. Call it the Frozen in Place and Slipping moment. The Great Recession was stopped at huge expense and unprecedented government action. This no doubt avoided another Great Depression. Yet it also propped back up much of the old order: The big banks, the shadow banking sector, the ratings agencies, etc. It enhanced the Federal Reserve. In other words, the playerz that most caused the economic collapse. Even Warren Buffett, the best example we have of a prominent honorable businessman, can only apologize missing the bubble and defend the Wall Street status quo.
Many of the economic imbalances that led up to the crash were also pretty much frozen in place, instead of the painful but ultimately healthy cleansing that recessions usually bring. More dolorous trends were accelerated, such as offshoring of jobs, increased used of temporary and contract labor, stagnant or falling wages, and rising income inequality. Atop this is piled the wreckage of countless lives and businesses that didn’t get a federal bailout. State finances remain in wreckage, a drag on recovery.
The “frozen in place” aspect of this moment is relatively good for Seattle, bad for many American cities. For example, the “next Microsoft” will likely be created in China, not Albuquerque. Cities such as Phoenix that wanted to build Seattle-like biosciences clusters are out of luck. The winners remain winners; the losers are stuck.
This stasis is an illusion, of course. The world is changing rapidly. American metros that aren’t moving ahead in sustaining and adding to a quality economy are actually falling back. And the risks are great: Another banking crash; Europe’s troubles, and American political paralysis among them. It says something when the best the expert conventional wisdom can offer is the hope of a very slow, very weak trajectory we will call recovery.
Noteworthy: Port of Tacoma commissioners have selected five finalists for chief executive officer. In addition to interim executive director John Wolfe, they are: Brian Boyle, an executive with PortsAmerica, a terminal operator; Bernard Groseclose, former CEO of South Carolina State Ports Authority; Ned LaGoy, an executive with Sea Star Shipping in Puerto Rico, and Ali Nikkhoo, a former shipping line and trucking company executive.
— Late last month, the state issued $1.1 billion in Build America Bonds to finance summer highway construction projects. State Treasurer James McIntire said the bonds saved about $155 million over traditional tax-exempt bonds. Build America Bonds are taxable and the federal government pays agencies that issue them 35 percent of taxable interest rates to make the securities more attractive.
— Ahead of Friday’s Headlines Dept.: Payroll outfit ADP estimates that 55,000 private-sector jobs were added last month. We’ll know more tomorrow, when the Labor Department reports. What to really watch for: long-term unemployment; the “real” unemployment number, including underemployed and discouraged workers, and young-person unemployment.
Today’s Econ Haiku:
So what is BP hiding?
Just food poisoning?