The U.S. economy has run out of steam. Many Americans have concluded that the time has come for economic models based on never-ending growth to be replaced by an economy based on sustainability.
Although it’s easy to describe the promised land — a nation that spends within its means, does a better job of meeting human needs, protects the environment, provides adequate systems for mass transit, and eschews fossil fuels for renewable sources of energy — it’s hard to imagine a smooth transition between our existing “growth is good” economy and a sustainable future.
It may be useful to summarize how we arrived at our current crisis. Our nation’s trade balance has been out of whack for years. While many nations (especially China and Saudi Arabia) produce things we want, the U.S. hasn’t been very successful at convincing overseas customers to buy what we produce, so our exports have a much lower value than our imports. We’ve “handled” the problem by borrowing billions of dollars from the governments of China and Japan.
At the same time, the indebtedness of the average American family has been growing at a rapid clip, due in part to the easy availability of credit cards. More and more Americans have been acquiring things they haven’t paid for yet — things we hope to pay for with money we’ll earn next year.
During the housing bubble, many of us, encouraged by profit-hungry bankers, decided to take out a second mortgage and use the cash to buy even more stuff. These loans were a new twist on run-of-the-mill indebtedness: they were backed by fictitious collateral.
The strong growth rates experienced by the U.S. economy during the 1990s and early years of this century turned out to be an unsustainable smoke-and-mirrors game.…