WASHINGTON – Former Treasury Secretary Timothy Geithner just published “Stress Test” his memoirs of the incredible and challenging post-2008 recession years.
America is doing poorly
In a Q&A session with TIME magazine, (May 16, 2014), about the book and the American economy, this is what Geithner replied to a question about rising income inequality in the USA:
“If you look at this country today, we still [have] high levels of poverty, a long period of almost no growth in the median wage. You referred to the big rise in inequality, but also there’s a diminished sense of mobility [and] opportunity across generations. And that’s a very damaging thing. It is very important that we rediscover a capacity to try to deliver policies that do a better job of improving the chances the average person has coming out of school today”.
Welcome candor
Well, here is welcome (but chilling) candor from a former top-tier economic policy-maker who can finally tell the truth, as he is no longer in office. A most unflattering picture of today’s America and of its prospects. A lot of poverty, and no income growth. As for the vaunted bliss of “upward mobility”, well it is gone. The younger generation has no real opportunity to do better than the one before. We are stuck. And policy-makers have no new bright ideas.
Geithner saved us from financial collapse
To his credit, Geithner, while Secretary of the Treasury, managed to rescue the country from a historic financial catastrophe that might have become a lot worse. The Big Recession did not turn into the Big Depression. True enough, as he himself admits, the emergency measures taken by the Obama administration in a sense “rewarded” Wall Street and therefore some of the people who had engaged in reckless behavior. But Geithner (and others) saved us from complete disaster.
However, the various emergency interventions did not include the relaunch of an innovation wave that would make America great again. We survived, and we are here to tell the tale.
We survived, but we are not thriving
But, compared to other ages, including the “roaring ’90s” we are just limping along. As Geithner himself readily admits: no more upward mobility, too much poverty, and wage stagnation. And, worst of all, little hope of a good, high rewards career for those who come out of university today, with an enormous debt burden represented by their student loans.
Can America escape decline?
As I said, Geithner’s candor is welcome. America is in trouble. Deep trouble, (unless you think that stagnation and economic decline, as long as they do not come about too suddenly, are basically OK.)
Still, it would be nice if somebody could come up with some kind of magic formula for restarting America’s innovation engines.