Kick in the Pants Toward Economy 4.0
The man’s a legend. Kenneth Rogoff, economist extraordinaire. Used to be the chief economist of the International Monetary Fund and now when you visit his office it is at a fancy university in Cambridge, Massachusetts. Dr. Rogoff is co-author of the most extensive analysis of the financial meltdowns of the last 400 years. His book, “This Time is Different” is about how this time was not different. “The good thing, David, is that financial downturns always come to an end.” Yessir, but when? Back when I asked the question, Dr. Rogoff figured that by 2011 things might be back to 2007 levels, that is to say, we could crawl out of the hole by next year.
That moment propelled down this road we are calling “Economy 4.0.” Dr. Rogoff was answering the question as asked and not making any broader philosophical points about the need to change the world for the better, an area where he also has a remarkable record. But what got me thinking was going back to 2007 as the benchmark, as the light at the end of this recessionary tunnel. Maybe 2007 was a good year for you, perhaps an engagement or a new baby or something. But for our communities, our country, our world, 2007 was something less than a golden age. Real wages in America? Not so good. Debt piled on hardworking families. The state of public education or the cost of higher ed. America’s urban blight? The environment? Healthcare? Global poverty? National Security? If the destination is 2007, we may be on the wrong train.
So for me, the question becomes: Who is doing the work on a next-generation financial system that will replace the one that nearly died in 2008? What are the competing visions? Whose interest will the next economic system serve? And as a reporter, how do you actually cover the future?
We chose a pair of lenses through which we can catch some repeated glimpses at the economic future under construction. Over the next couple of years, financial reform, both in the U.S. and globally, is being implemented, often behind closed doors, with huge piles of money and power in play. I figure that deserves some sustained scrutiny and we are going to call that piece of our coverage Rules of the Road.
At the same time there is a growing movement to better measure the economy, so that things that contribute to well-being and real prosperity get graded and bad stuff like crime and pollution doesn’t end up in the “plus” column of our national spreadsheet. The theory is that you get the outcomes that you measure, so what about measuring the stuff we really want like security, like time with family, like happiness. There is a strong argument that needs to be explored that you can only go so far with the quarterly GDP or the daily Dow Jones Industrial Average. That piece gets the title “New Numbers.”
Finally, you may well ask: why call it “Economy 4.0”? Consider it a touch of irony about the future always being the next software upgrade. However, if you insist on pinning me down, any chance I can sell you this argument for our title? Economy 1.0: Industrial Revolution to the Crash of 1929. Economy 2.0: The period guided by Depression-era financial rules, including Glass-Steagall. Economy 3.0: The era of deregulation ushered in by President Reagan and Prime Minister Thatcher that brought us the boom of the internet and the sub-prime bust. Economy 4.0: What comes next.
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