One of the best analyses of the causes of the recession and how we can return to health has been written by three authors under the auspices of the New America Foundation (a non-partisan, non-profit, public policy institute with Newton’s own Atul Gawande serving as a Board member). Look to your right for the link – it’s long but worth the read.
The authors point to three primary causes for the recession:
1. - Debt-Deflation: We borrowed against the inflated values of our homes and now face a significant debt overhang
2. - Excess Global Supply: In Asia, there has been an emergence of export-oriented, high savings, low wage countries that has resulted in excess supplies of labor, capital and productive capacity in the US
3. - Stagnant Wages & Increased Levels of Income/Wealth Inequality
Two of the important solutions:
1. - Significant public investment in public infrastructure (energy, transportation, education, R&D, water treatment) to put people to work and to lay the foundation for a more efficient and cost effective national economy
2. - Comprehensive debt restructuring, especially in banking and real estate
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