Monday, September 14, 2009

The lost decade: Would you believe I'm talking about the U.S.?

The official Unemployment rate shows us at nearly 10%, while the unofficial rate is close to 17%. But in fact since 1999, the U.S. has not created any additional jobs. When President Bush was President the creation of new jobs never kept pace with the rise in population. So while they did add jobs, it was never equal to, or greater than, the required number of jobs just to break even. That's a full 10 years, a decade, where the U.S. has not created new jobs. When many hear the term "the lost decade" they think Japan. The Lost Decade, according to Wikipedia, is the time after the Japanese asset price bubble's collapse, which occurred gradually rather than catastrophically.
The Lost Decade consists of the years 1991 to 2000 and was when economic expansion came to a total halt in Japan during the 1990s. The impact on everyday life was muted, however. Unemployment ran reasonably high, but not at crisis levels. This has combined with the traditional Japanese emphasis on frugality and saving (saving money is a cultural habit in Japan) to produce a quite limited impact on the average Japanese family.

But more and more we will remember that from 1999 to 2009 was the time we lost a decade for creating jobs. It is also a decade of lost momentum in creativity since creativity leads to new products which in turn leads to job growth. The U.S. has been stagnant these past 10 years. Most technology today was invented before 1999 and the first 5 years of this past decade was used to bring most of those products to market. But over the past 5 years we have not been fueling the engine of creativity, as we had in previous decades. One exception might be biotechnology, where medical advances have been relatively steady.

If we are to get out of the doldrums of a bad economy, we must invest more in Research and Development at a time when we don't have spare resources. Indeed the next 10 years are going to be difficult at best from the economic dislocations and imbalances we face today. There are too many variables to manage and our government has a lot of balls in the air right now. They are doing their best as they inherited this mess, lest we forget.

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