Tuesday, November 24, 2009
(fm the BC thread "Odds against tomorrow")
The good news is that a Reset Button will probably work.
Economies are based on three (you can count on me) factors, otherwise called Capital Assets.
1) Physical Capital, that is plants, equipment, and transportation and communications lines.
2) Natural Resource Capital, oil, minerals, water, seaports, fertile soil and climate.
3) Human Capital, the training and the culture of the people.
Finance Capital is a poor and distant component of what determines countries long term wealth.
While there has been some neglect and investment is always needed the United States still has the best infrastructure for a country of it's size. The second category is also one in which the US has no peer competitor. For the third, and really the most critical factor of Human Capital while many hear bemoan the fecklessness of 20% to 30% of the population the fact is that on average the American worker is skilled and productive and has the accumulated capital of a culture that encourages productivity and self reliance to guide them.
Germany and Japan bounced back from the devastation of WW-II within 10 years of when their economies were unchained. What is needed is an American Ludwig Erhard to spark another Wirtschaftswunder. Note the Wiki mendaciously ascribes post war growth to the benefits of nationalization.