Iceberg Economics

Posted: Jan 23, 2009 1:09 PM
Iceberg Economics

It’s possible that, after he plowed his ship into an iceberg, Captain Edward John Smith of the RMS Titanic paused to worry if he’d remembered to unplug the coffee maker. But it’s not likely.

Smith, after all, had real problems. His ship was sinking, and that probably absorbed most of his energy.

Many would say the American economy has also hit an iceberg. It’s purportedly sinking under a mountain of bad debts and soaring unemployment. As a new president takes charge, one would expect him to focus exclusively on righting the ship.

Not quite. Oh sure, Barack Obama mentioned the economy in his inaugural address, and sure, he intends to spend hundreds of billions, maybe even a trillion dollars, to “stimulate” it. But the new president’s mind seemed to be elsewhere. He apparently wanted to focus on bigger, longer-term problems.

“Our economy is badly weakened, a consequence of greed and irresponsibility on the part of some, but also our collective failure to make hard choices and prepare the nation for a new age,” Obama announced. Sounds as if he -- or at least his speechwriter -- has been reading Andrew Bacevich.

In his new book “The Limits of Power: The End of American Exceptionalism,” Bacevich takes Americans to task for our lifestyle choices. The author is a professor at Boston University and a retired Army colonel, and the book aims to explain America’s foreign policy failures in recent decades.

Bacevich points the finger at domestic economics. Our desire to buy bigger things, better things and ever-more things, he writes, is bringing the country to ruin. It forces us to borrow (from China) trillions of dollars we might never be able to pay back and to be involved militarily in a region (the Middle East) we’d be better off avoiding.

There’s a case to be made here. Most Americans could stand to lose a few pounds around the waistline and a few pounds of electronic gadgets around the house.

Bacevich’s proposed solution, however, seems less sweeping than his stated problem. To save itself, he writes, the U.S. should focus on twin goals: getting rid of nuclear weapons and battling global warming.

But how is getting rid of nuclear weapons going to help? It’s difficult to see how junking the U.S.’s remaining 6,000 or so warheads (down from 23,000 at the height of the Cold War) is going to convince people to stop buying iPods and sneakers that are made in China.

As for global warming, well, like Captain Smith’s coffeemaker, it’s the sort of issue we worry about when things are going well, but have little need to be concerned with if things are going poorly. The sinking of the Titanic was going to eliminate any damage a melting coffee pot might cause. And the sinking of our economy is doing the same thing with the supposed causes of global warming.

Look no further than gas prices. Over the summer fuel cost $4.50 per gallon, and it looked as if prices would never stop soaring. Today you can fill up for $1.85. That’s because gas prices are driven by the law of supply and demand. Today’s recession has slashed consumption and, thus, prices.

Of course, as consumption of gasoline has dropped, so has the emission of the CO2 that supposedly warms our atmosphere. So if global warming is indeed a problem, a recession should be just what the doctor ordered. And the longer and deeper the recession is, the better. That would be a Bacevich-style solution, a lifestyle change that would end up improving conditions in the U.S.

Obama may have read the book, but apparently failed to digest the message. “With old friends and former foes, we will work tirelessly to lessen the nuclear threat, and roll back the specter of a warming planet,” he announced in his inaugural. Still, (wisely) he backed away from the bigger message. “We will not apologize for our way of life, nor will we waver in its defense,” Obama added.

That’s what the economic “stimulus” package is about: Getting our economy growing again. No, the stimulus plan that lawmakers are considering certainly isn’t the best way to do that. But politicians of all stripes agree that getting the economy growing again is critical.

Our country has a serious problem, and it’s time to set the pieties of environmental activists aside. That’s why our new president favors economic growth -- even it that ends up generating more CO2.

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