Professor Andrew Odlyzko leads off this week's Outside the Box with a familiar litany:
"A superpower with crippling debt, exorbitant taxes, glaring inequality, wages far exceeding those of competitors, high and persistent unemployment, lack of basic workplace skills, malnutrition, a rapidly growing rival across the ocean to the West, heated debates about the role of government in the economy, and widespread pessimism about the future."
And then he asks the obvious question: "Could that be any country but the U.S. today, with China as the looming threat?" The answer of course is yes, but do you know which country, and when? Here's another hint: a technological revolution was largely responsible for pulling this country back from the brink and setting it on a sustainable course again.
Another hint for you: this is the only country in history that has pulled off such a feat. It did it in part by issuing 3% "perpetual" bonds (which never had to repay the principle, though they eventually did), an option no nation is likely to get away with today; but the author's point – and it's a very important one, given our present situation – is that it can in fact be done. If we can manage to make a few reasonably smart shortand medium-term fiscal and other policy decisions, and then provide the right set of conditions for the next great technology breakout – I'm thinking the incredibly fertile and dynamic interface involving biotech and nanotech, robotics and artificial intelligence, along with next-gen telecom and energy revolutions – then there's no reason why the 2020s can't go down in history as the opening era of a global golden age.
This is more economic history than macroeconomics, but I find it very instructive and oddly hopeful. Professor Andrew Odlyzko is a professor in the School of Mathematics at the University of Minnesota. He is engaged in a variety of projects, from mathematics to security and Internet traffic monitoring. His is currently writing a book that compares the Internet bubble to the British Railway Mania of the 1840s, and explores the implications for the future of technology diffusion. I look forward to reading that book.
On Tuesday morning, April 24 I will be speaking at a conference on demographics sponsored by the Global Interdependence Center. It will be held in Philadelphia at the LeBow College of Business of Drexel University and chaired by Bill Dunkelberg, who I am working with on a book on employment. (Bill is a professor at Temple University and the chief economist for the National Federation of Independent Business). The conference is quite reasonably priced and focuses on a topic I am quite fond of. You can find out more at http://www.interdependence.org/programs-and-events/event-registration/programs/the-30th-annual-monetary-trade-conference-demographics-politics-and-economic-growth/
I am back in Dallas for the evening but leave tomorrow morning on a 7:30 flight to NYC to speak at a Bloomberg Trade Book event, then back late Wednesday afternoon, in time to take my daughter Amanda to a Mavericks game. And I'll be home for almost two weeks! And then I resume a rather peripatetic bout of travel for almost two months, concluding with a few weeks in Tuscany.
Have a great week!
Your ever hopeful that we'll deal with the deficit analyst,
John Mauldin, Editor
Outside the Box
Crushing national debts, economic revolutions, and extraordinary popular delusions
A superpower with crippling debt, exorbitant taxes, glaring inequality, wages far exceeding those of competitors, high and persistent unemployment, lack of basic workplace skills, malnutrition, a rapidly growing rival across the ocean to the West, heated debates about the role of government in the economy, and…