(Robert Samuelson – Washington Post)
We are defining prosperity down – or, more accurately, prosperity is defining itself down. We are eight years into the recovery from the Great Recession, the unemployment rate has dropped to 4.4 percent, the stock market is pushing record highs, and consumer confidence seems robust. And yet, the economy doesn’t feel as good as it looks. Anxieties lurk.
There is an explanation, argues Ruchir Sharma. This doesn’t feel like a typical business cycle recovery, because it isn’t. We have entered a new era of low economic growth and high political disappointment. Our democratic system requires strong-enough economic growth to raise living standards and support activist government. These expectations, present in most advanced democracies, are no longer realistic, because the global economy has changed in ways that reduce growth.
Sharma, a top investment strategist at Morgan Stanley, lays out his thesis in the current issue of Foreign Affairs. In a standard recovery, low interest rates, big government budget deficits, the repayment of private debt and the sell-off of surplus inventories and investments suffice to restore satisfactory economic growth. By Sharma’s logic, this didn’t happen after the Great Recession, because deeper forces dominated. Click here to read more.