[Editor's note: This is the third in a three-part series on The Next Economy. Part one is here: "Inside the 'Growthless, Jobless Recovery'"; part two is here: "Four Metrics for Gauging True Economic Recovery".]
We face a very unique confluence of circumstances. It may take us the better part of this decade to stabilize house prices and employ all who have lost jobs as well as new entrants. Bitter medicine, maybe, but it is better than scrambling up the flanks of a false hope only to crash again in less than five years.
There are some things we can do to expedite our recovery. We can focus our policies on increasing entrepreneurship, not on subsidies or tax cuts for established corporations. Almost all net new jobs in the U.S. between 1980 and 2005 were created by companies less than five years old. Many large public companies are owned primarily by institutional investors that want to maximize shareholder return, and minimize hiring. Start-ups are the engine to lead us out, not the Fortune 500.
If we see this as a decade-long recovery, which it will be, then spending on education and infrastructure starts to look a lot more attractive than promoting "stimulus," which is like throwing a snowball into Lake Erie and then checking to see if the water level rose. If infrastructure sounds a bit vague or overwhelming, here are two places to start.
Firstly, the American Society of Civil Engineers gave America's infrastructure an overall grade of "D" on their most recent report card. Let's not wait for an earthquake or flood to improve our grades. We should treat that report card like a Saturday to-do list and get going. Secondly: High. Speed. Trains. Moving goods and people around quickly, efficiently, and with minimal emissions is becoming a competitive advantage.
The U.S. has committed one fifteenth of the funding to high-speed rail that China has committed. To visualize what one to fifteen looks like, imagine that the height of Apple's glass cube in New York represents our funding for high-speed rail. China's bet is the Washington Monument. "That train is dead," claimed governor-elect John Kasich from Ohio in his first press conference this November. Post election, Ohio and Wisconsin are both rejecting millions in federal funding for high-speed rail.
Human capital investment needs to be right alongside physical improvements. That means applying performance metrics to schools (see New York City" target=new> and training the next generation of Americans for technical and knowledge-based jobs that can't be readily shipped to low-cost providers.
Entrepreneurship and investment; infrastructure and education. These should be our four compass points for the next decade, and green is a catalyst for all of them. Green has been a great lens to create corporate value, through both operational cost savings and growth, for those companies who have committed to it. In successful companies green is not a niche, an add-on, or a separate function. It is way to innovate and evolve the business.
Similarly, sustainability at the national level should not be tucked away at the Department of Energy or in federal procurement guidelines; it should be a fundamentally new way to look at the provision of government services. We currently do not have a long-term growth strategy for the U.S., so let's look to sustainability to help define and drive America's next chapter.
The recession has had a devastating impact on many individuals, families, and communities. It "officially" ended 17 months ago, but it does not seem like it. We are indeed experiencing the "new normal". Acknowledging this, recognizing that it will take years to dig out, resetting expectations, and rethinking policies are reasonable steps forward.
Since "the new normal" already has negative connotations, I prefer "la nouvelle normale." Everything sounds better in French, and Europeans make thrift look good. In the Next Economy, maybe we will get the entire month of August off too.
The opinions in this series are the author's, and not of his employer.