That’s what Richard Florida calls this current economic period, compared to those in the past. Excerpt:
While some do not want to face the looming reality, it is becoming clearer every single day that what we face is not any typical recession but a full-blown economic reset. My own look at the previous two similar crises shows that Great Resets like what we are now going through are generation-spanning events which require deep changes in economic, institutional, and spatial structures.
Are our economic policymakers ready for the enormity of the challenges we face – the deep and fundamental changes in our economic system, from what we produce to what we consume – required to restore economic prosperity?
Bill Galston takes a look at the new economic survey out from Pew (“How the Great Recession Has Changed Life in America“), and sees a dramatic psychological and cultural shift in the American people, coming from the economic situation. Excerpt:
Today, the optimists’ share has declined to 45 percent, while pessimists now constitute fully 26 percent of the population. And doubt tends to reinforce caution. We don’t have enough evidence to conclude that the Great Recession will generate the kind of long-lasting risk aversion that characterized the Depression-era generation throughout their lives. But we do have reason to believe that for some time to come, what Keynes famously called “animal spirits” will remain subdued, which suggests that we’re in for a slow recovery and historically high levels of unemployment for much of this decade. If the Pew report is on target, the “new normal” will be more than a slogan.
This made me think about how unbelievably relieved Julie and I are to have sold our house recently, and to have paid off our cars. We are so anxious about the economic future that we aren’t remotely ready to buy a new house anytime soon, or make any big purchases (like a car). We’re going to sit tight and sock as much money away as we can. The problem with that is that if everybody is as cautious as we are, the economy will not recover. So I’m in a position of hoping that most Americans aren’t as thrifty as we intend to be — that is, that they’re more willing to take on risk than we are. What’s the morality of that? Hmm.
Galston’s pointing out how pessimism on the economy can be a self-fulfilling prophecy. That may be, but the risk of taking risk right now strikes many of us as too much to bear. Consider this eye-popping commentary, based on the judgment that our debt-swamped banking system is going to need another bailout in a couple of years, and the government will have no choice but to give it to them.
How has the Great Recession reset your life? How do you anticipate that it will? Another way it has reset my life, for the longer term: I am going to go to extraordinary ends to keep my children from taking on debt to pay for college.
UPDATE: Edmund Conway, writing in The Telegraph:
This is not merely about the financial crisis, but something more deep-seated: the way in which wealth is distributed around society. It is about the middle classes, and why they have become the biggest victims of all. … [T]he cost of trying to live a stable, contented middle-class life will balloon.
So I have one simple question: when do the politicians intend to let the public know about the fate that awaits them? The longer they put it off, the nastier the reaction, the bigger the strikes and the greater the chance that governments will fall. Don’t say you weren’t warned.