Can Anyone Steer This Economy? - Business Week on the Impact of Globalization that We Don't Discuss

Our government attempts to preside over the stability of our economy, maintaining a balance between recession and inflation, using the same fiscal (e.g., tax cuts or hikes) and monetary (e.g., Fed interest rate hikes or cuts) tools that have been used for generations. While more an art than a science, and prone to "overshoot", these Keynesian and other tools have generally worked remarkedly well at keeping us out of any gigantic recession or murderous inflationary surge (or worse, the dreaded "stagflation"). This has been for the betterment of society, and allowed us as a nation, with all the usual compaints, to enjoy 75 years of prosperity and growth, since the great depression, that is unparalleled in world history.

I generally don't like Business Week "think pieces" -- they tend to be trite and reflect thinking that is overly popular and hence past its prime. However, this article is different -- it raises some critically important questions, most central of which is the following: in a world where our economy is increasingly subject to the forces of globalization and interconnectedness of global economies, has our government's power to influence our economy through the usual tools diminished, and how much? What impact does this have on future economic and political stability and the wealth of this nation? This article discusses very interesting issues and is well worth reading by everyone concerned with their childrens' future, subject to some flaws and faulty observations. For example, this article focuses on ideas like wage growth, and not the more important concept of "purchasing power" -- how much does it matter if wage growth is relatively stagnant, if technological advances and production efficiencies allow someone to acquire the same good for 30% less than he would have 10 years ago.

But overall, this is an article that is a worthy read.

Can Anyone Steer This Economy?