New book casts America's economic future in strikingly positive light
Daniel Gross' new book "Better, Stronger, Faster: The Myth of American Decline and the Rise of a New Economy," has a more optimistic take on the U.S. economy and its current state.
Americans have become accustomed to hearing grim news about the state of the economy since the economic recession began in 2008.
First it was the meltdown of the financial services industry, which necessitarted massive bailouts for banks, then there was the housing foreclosure crisis, lost jobs leading to high unemployment and now an economic recovery that is moving along at a tepid pace. On the international stage, there are worries America may be overtaken economically by emerging markets like China.
Glum, if not downright depressing.
But author and economics editor Daniel Gross has a more optimistic take. In his new book, "Better, Stronger, Faster: The Myth of American Decline and the Rise of a New Economy," Gross argues the country's initial reaction to the economic hardships have paved the way for a brighter, stronger future.
“We didn’t lose the capacity to grow,” Gross said. “We just suffered the type of fall that we had not collectively taken in 80 years”
Gross was one of the first to identify that the United States was in a recession back in January 2008. Though he once believed the U.S. would languish in slow growth for a long period of time, he now says we can turn the economy back into a superpower.
“In 2009, everybody — left, right, centrists, historians, futurists, were all convinced not only that we had taken a big fall, but that we had somehow lost the tools, the capabilities, and the will to grow,” Gross said.
He said it reminded him of the Great Depression in 1933, when people were saying the exact same things. In his book, he draws clear parallels with the 1930s, not just in terms of economics and finance, but also in terms of the political situation.
“When you look back through American history, we’ve been in these positions before. There’s always this undercurrent of pessimism surrounding our trademark optimism,” he said.
Gross calls this the negative narrative that everything — housing, finance, politics, employment — is failing, a corridor of doom.
“If you get out of this corridor, and you get out into some parts of the U.S. where unemployment is 3 and 4 percent instead of 8 or 9 percent, and you talk to companies whose businesses have grown, in the past few years, you realize that we still have what it takes to grow and engage,” he said.
Gross said American companies and institutions have done well in engaging the world. He cited the fact that exports have risen about 30 percent in the last two years and the private sector’s restructuring and discovery of new markets and growth as evidence the market is rebounding.
“People are coming from all over the world to consume what we make, there’s a record number of people attending university for higher education, record number of tourists coming here, we lead the world in foreign direct investment. If we were a nation in decline, the rest of the world would be a lot less interested in us than it is showing,” Gross said.
Though many see the stock markets as economic indicators, Gross said that's not always right. He said between 1929 and 1954, the stock market didn’t actually reflect growth in the economy and stocks didn’t regain their peak because of a massive bubble.
“In those 25 years, we rebuilt ourselves, we led the world to victory in World War II, we developed television and nuclear power, and built a middle class society,” Gross said. “Look at the Nasdaq. It peaked in 1999. We had that crazy tech bubble. It’s far below where it was, but are we really saying that technology companies haven’t done anything in the last 13 years?”
According to Gross, the U.S. is currently in a similar situation. He said even though housing prices may not reach their 2005 peak for another 15 or 20 years, it doesn’t mean the economy isn't going to grow and develop.
Gross said experts always seem to be the last to know about an economic turn.
"There's an entire forecasting industry, and they always get it wrong, especially at points of inflection. People's models don't tend to account for disruptions and discontinuitiues," he said. "What we had in 2008 was really the mother of all modern discontinuities. Our entire financial system essentially went bankrupt and so did the world. So we had this contraction that nobody projected."
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