Are there silver linings to the dark cloud of the financial crisis? It is a truism in our politics that only a crisis produces real change. So, looking on the positive side, what might we hope this crisis will bring forward? Here are seven outcomes worth seeking:
1. For decades, anti-regulation market fundamentalists have argued with increasing success against government interference in the economy. Thanks to the crisis, we should be able to say goodbye to all that. Our country is in deep trouble on several fronts, and if we want to cure these ills, some strong medicine must be taken. That points to effective government intervention as a big part of the answer. Smart government does not mean wasteful, bloated government, but it does mean government. So bring on the regulation, and not just in the financial sector.
2. If we are in fact going to have responsible government, it follows that we will need a better brand of politics. Over time, the same politics that got us into our current predicaments are unlikely to do a good job getting and keeping us out. The financial crisis should spur interest in the backlog of political reforms including public financing of elections, tough regulation of lobbying, and other measures now urgently needed to repair American democracy and reassert popular control.
3. As political leaders look for ways to stimulate the economy, we can urge that they channel major public investments into rebuilding America’s collapsing infrastructure, into long-neglected public amenities, and, most of all, into building new industries that can help us simultaneously address our massive dependence on foreign oil and our urgent need for new, renewable energy sources to address the climate crisis. Recent studies show that millions of new green collar jobs can be the result.
4. Perhaps the financial crisis will teach us to live more simply with less consumption. Our materialism, positive psychologists report, is toxic to happiness, and our hyper-consumption is one of the main drivers of environmental decline. Being less focused on getting and spending (initially, in part, because there will be less to spend) can help us rediscover that the truly important things in life are not at the mall nor, indeed, for sale anywhere.
5. Wall Street’s excesses should rekindle America’s populist heritage. For some time, a growing crisis of inequality has been unraveling America’s social fabric and undermining our democracy. It is a crisis of soaring executive pay, huge incomes and increasingly concentrated wealth for a small minority, occurring simultaneously with poverty near a thirty-year high, stagnant wages despite rising productivity, declining social mobility and opportunity, record levels of people without health insurance, failing schools, increased job insecurity, swelling jails, shrinking safety nets, and the longest work hours among the rich countries. For as long as I can remember, we have been told to keep economic growth on a fast track, or we will have to face the redistribution issue. Well, it is high time we did face that issue. We have had lots of growth, and income distribution has worsened.
6. For years now many of our best and brightest young people have gone to Wall Street to make their fortune and their fame. Much talent has been wasted creating and marketing financial instruments that have allowed assets to grow by a large multiple of the real economy. We can hope that now much of this talent will be put to better, more socially constructive things. It is certainly needed elsewhere. In a similar way, we can hope that investors will seek opportunities that build non-speculative, long-term value, for example, by investing in the transformation of our energy sector.
7. Most fundamentally, the financial crisis should lead more and more people to realize that we live and work in an economic system that cares profoundly about income, profit, and growth and sees people mainly as workers and consumers. In a similar way, it sees the environment mainly as a source of natural resources and a place to discard wastes. It is up to us, as citizens acting mainly through government, to inject values of fairness, justice and sustainability into that system. But today we mainly fail at this task because our politics are too enfeebled. The best hope for real change in America is a fusion of those concerned about environment, social justice, and strong democracy into one powerful force for progress.
Crises, for all their pain, can present us with precious moments not to be squandered. They force us to think and to decide. If they are serious enough, they can push fundamental questions to the fore, including questions of national identity and purpose. In responding to crises, we can get it right or we can get it wrong. The Great Depression led to the New Deal, but 9/11 led to a series of tragically misguided actions. The financial crisis can yet lead to deep changes that have long been badly needed.