The Economic Consequences of Mr. Bush

["Dave Farber" <dave () farber net>]

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Subject: [Dewayne-Net] The Economic Consequences of Mr. Bush

[Note:  This item comes from friend Esme Vos.  DLH]

The Economic Consequences of Mr. Bush
The next president will have to deal with yet another crippling legacy  
of George W. Bush: the economy. A Nobel laureate, Joseph E. Stiglitz,  
sees a generation-long struggle to recoup.
by Joseph E. Stiglitz December 2007
<http://www.vanityfair.com/politics/features/2007/12/bush200712?printable=tr
ue&currentPage=all 
>

The American economy can take a lot of abuse, but no economy is  
invincible. Illustration by Edward Sorel.

When we look back someday at the catastrophe that was the Bush  
administration, we will think of many things: the tragedy of the Iraq  
war, the shame of Guantánamo and Abu Ghraib, the erosion of civil  
liberties. The damage done to the American economy does not make front- 
page headlines every day, but the repercussions will be felt beyond  
the lifetime of anyone reading this page.

I can hear an irritated counterthrust already. The president has not  
driven the United States into a recession during his almost seven  
years in office. Unemployment stands at a respectable 4.6 percent.  
Well, fine. But the other side of the ledger groans with distress: a  
tax code that has become hideously biased in favor of the rich; a  
national debt that will probably have grown 70 percent by the time  
this president leaves Washington; a swelling cascade of mortgage  
defaults; a record near-$850 billion trade deficit; oil prices that  
are higher than they have ever been; and a dollar so weak that for an  
American to buy a cup of coffee in London or Paris—or even the Yukon— 
becomes a venture in high finance.

And it gets worse. After almost seven years of this president, the  
United States is less prepared than ever to face the future. We have  
not been educating enough engineers and scientists, people with the  
skills we will need to compete with China and India. We have not been  
investing in the kinds of basic research that made us the  
technological powerhouse of the late 20th century. And although the  
president now understands—or so he says—that we must begin to wean  
ourselves from oil and coal, we have on his watch become more deeply  
dependent on both.

Up to now, the conventional wisdom has been that Herbert Hoover, whose  
policies aggravated the Great Depression, is the odds-on claimant for  
the mantle “worst president” when it comes to stewardship of the  
American economy. Once Franklin Roosevelt assumed office and reversed  
Hoover’s policies, the country began to recover. The economic effects  
of Bush’s presidency are more insidious than those of Hoover, harder  
to reverse, and likely to be longer-lasting. There is no threat of  
America’s being displaced from its position as the world’s richest  
economy. But our grandchildren will still be living with, and  
struggling with, the economic consequences of Mr. Bush.
Remember the Surplus?

The world was a very different place, economically speaking, when  
George W. Bush took office, in January 2001. During the Roaring 90s,  
many had believed that the Internet would transform everything.  
Productivity gains, which had averaged about 1.5 percent a year from  
the early 1970s through the early 90s, now approached 3 percent.  
During Bill Clinton’s second term, gains in manufacturing productivity  
sometimes even surpassed 6 percent. The Federal Reserve chairman, Alan  
Greenspan, spoke of a New Economy marked by continued productivity  
gains as the Internet buried the old ways of doing business. Others  
went so far as to predict an end to the business cycle. Greenspan  
worried aloud about how he’d ever be able to manage monetary policy  
once the nation’s debt was fully paid off.

[snip]

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