Even as America shuts the book on the worst financial and political decade since the 1970s, the biggest questions remain unresolved. Here are 10, with my own brief comments:
1. Will Deficits and Debt Sink America? Answer: No. America is stronger than that. But high debt can suppress growth and opportunity for multiple generations. Study Japan.
2. Will Health Care Costs Sink America? Answer: Yes, if innovation ceases. What is needed is a Moore's Law revolution in health care: early diagnosis with silicon, deep statistical analysis with software, shared electronic records with bandwidth, etc. The biggest worry about Obamacare is that its heavy federal hand will reduce incentives for private health care innovation.
3. Will Unemployment Stay High? Answer: Depends on how you define unemployment. By official payroll figures, the number is likely to stay high for years. But temporary and part-time work will recover and grow.
4. Does America's Underclass Have a Chance in a Knowledge Economy? Answer: Sadly, not much. Which is why we must get serious about reforming/deregulating public schools and bringing innovation and excellence into K-12 education. It's also why America needs a seriously tough border policy combined with more skills-based immigration.
5. Is Inflation or Deflation a Greater Threat? Answer: It's complicated. Moore's Law and competitive global trade drive prices down. A debased currency drives prices up. Since 2001, both situations have obtained in the U.S., which is why CPI growth has stayed low even as products largely untouched by Moore's Law--gold and commodities--have soared. Since no one can retract Moore's Law, and since the federal government has an overwhelming bias toward cheapening the currency (to reduce relative debt in a debt-ridden nation), we are probably stuck in this standoff for some time.
6. Must We Trade Dynamism for Security? Answer: Nothing says America must trade centuries of dynamism, innovation and social mobility for the Western European social democracy model. But absent political leadership, America could slouch there, and rather quickly. Much of our current willingness to trade dynamism for social welfare is driven by demographics. Baby boomers who marched for freedom now shuffle for Medicare. What's needed is a Reagan type who can appeal to the under-40s.
7. Can We (and Should We) Become Energy Independent? Answer: Energy independence sounds good but can mean many things. To greens on the left, it means radically shrinking our energy use. To America-firsters on the right, it means greater trade restrictions and withdrawal from the global economy. Both paths would damage the American economy. What's needed is true accounting of energy costs before we can even start on the right path. How much does Middle Eastern oil really cost? What do ethanol subsidies really cost? Can solar power follow a Moore's Law curve or is that a fantasy?
8. Is China a Friend or Foe? Answer: Current friend, potential foe. The No. 1 and overwhelming concern of China's political leaders is internal security. The leaders know they are riding a tiger and see continued economic growth as the key to their own survival. At the same time, a strident nationalist-populist strain bubbles in the Middle Kingdom. Disruption to China's growth could release those demons. So could political missteps. If you were U.S. president, how would you handle a hypothetical Chinese takeover of Taiwan, for example?
9. Are Islamic Jihadists Motivated by Religion or Resentment? Answer: I'm inclined to think economic and cultural resentment, not a love of Allah, drives Islamic Jihadists. Here you might argue that many jihadists come from middle- or upper-class families. But that may only reflect opportunity. What poor and rich radical Muslims have in common is a smoldering resentment over the decline of their Byzantine glory. (Think French resentment times a thousand.)
10. Is Political Bipartisanship Dead? Answer: Absent a profound national crisis--a jihadist nuke in Manhattan, North Korean missiles hitting Silicon Valley--yes, alas. Meantime, why can't the U.S. Supreme Court outlaw gerrymandering?
Post your comments below-- particularly if you have different takes on America's biggest problems. Fire away!
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