Where do we go from here?
Our afternoon session at the economic bloggers forum has been especially lively. That's because we're talking about how the hell we can get out of this mess. What's the economy going to look like next year? In 5 years? In 10? Several of the people here are economists so they tend to look at history for answers.
No consensus there. Some are saying the traditional rules for recovery apply: good fiscal stimulus policy will work. Others say we have to toss the rules out the window because we've never been here before. Former Federal Reserve economist Arnold Kling, who blogs here, pointed out the difference between the labor force now and the labor force of the Great Depression recovery: He said we don't have "the type of labor force that just goes back to the factory."
Investment advisor Michael "Mish" Shedlock, who blogs here, pointed out how Baby Boomers are competing with their own children for jobs. He said this is a recession where we are relearning many things.
Then, there's the issue of what fuels the economy. For the past few years, housing (building it, buying things for it) has been a significant chunk of GDP. What's going to replace it? Internet? Alternative energy?
Since we're at the Kauffman Foundation, there was also a lot of talk about entrepreneurship. Are the President's new tax measures and our immigration policies going to hurt the prospects for small business? Should we cut the payroll tax? (That prompted a mini-debate all its own.)
Lots of questions, many different answers. The people at this conference are extremely intelligent thinkers. They have a deep understanding of the economy. It's been very enlightening.
But my favorite moment of the afternoon came while Michael Mandel from Businessweek was giving his theory for where things might be headed:
But we have to have humility about our ability to predict the economy. So, I'm going to stop talking now.