Skyscrapers have never been just a fad. They've never faded to the margins—and probably won't—because in their American way they continue a much deeper tradition of upward striving, from East Asian pagodas and the ziggurats of Mesopotamia to the pyramids of Egypt, Central America, and Angkor Wat. (Thanks, Rose.)
The United States was not always the world’s economic leader. History looks more like a long-distance race in which one county assumes leadership for some time, only to lose it to another and return to the pack or disappear from sight. For much of the first millennium, and until the fifteenth century, China probably had the world’s highest level of output per capita. For a couple of centuries, leadership moved to the cities of northern Italy. It was then assumed by the Netherlands until around 1820, and then by the United Kingdom from 1820 to around 1870. Since then, the United States has been in the lead… If history is any guide, the United States will not remain in the lead forever. –Oliver Blanchard

What will life be like then? None of us have known any other world.

Housing affordability is one of the key issues facing contemporary America. According to HUD, 12 million renter and homeowner households paid more then 50 percent of their annual incomes for housing in 1999—and this was at the tail end of one of the strongest economic expansions in history. When a household uses such a disproportionately high percentage of its income for housing, it becomes very difficult to meet the other basic needs of living.

Here’s my question: Doesn’t that fact that we (collectively) are even having a national discussion about affordable housing imply that we believe there are systemic problems in the American capitalist-democratic system that can never be cured? In other words, if laissez-faire capitalism works, then the invisible hand of the market would allocate scarce resources efficiently and all types of housing needs would be met, including affordable housing (because there is a demand for affordable housing). However, this does not happen. Therefore policy, a “band-aid,” becomes necessary to modify the natural behavior of the market.

In short, my assertion is that the mere existence of policy (of any sort) supports the notion that an unrestrained market doesn’t really allocate resources efficiently, or equitably.

Given: the U.S. consumes much more than its “fair” share of per capita world resources (read this if you don’t believe that statement). How can we bring our consumption down? We are a nation of consumers, and trying to slow consumption is like trying to move an iceberg with a tugboat. Here’s an idea:

Increasingly, U.S. multinational corporations are turning overseas for cheaper labor. This behavior has been reinforced by various U.S. trade policies. Cheaper labor enables U.S. companies to sell goods at prices below what would be achievable with U.S. labor. If companies were restricted from using foreign labor, prices of certain goods would rise beyond the point where consumers perceive value in those goods—i.e., a consumer may not purchase a pair of Nike shoes if the price was $300. In other words, being dependent on/accountable to our own labor and resource supplies could help reduce our proportion of global consumption by increasing prices of the many luxury goods that we Americans now incorrectly view as necessities.

An “isolationist” labor policy, if it increased the prices of U.S. consumer goods, would also have negative short-run economic impacts (inflation, possible recession, increase in unemployment). However, in the medium-run, the Fed and the government could use an appropriate mix of fiscal and monetary policy to bring the U.S. economy back into a state of lower inflation and reasonable growth (this policy mix would necessarily be too complicated to discuss in these short paragraphs). The government could also enact policies that encourage economic growth via services rather than consumer goods, since services do not have nearly as large an environmental impact as goods.

Whaddaya think?

At Cornell (and indeed much of the rest of the world—but I’m focusing on my cultural frame of reference right now) people like to call major assignments that are due “deliverables.” Right now, I have many deliverables due, I’m grading some deliverables, and I’m worried about future deliverables. It’s quite driving me mad.