There He Goes Again

David Brooks's column for today:

Britain soon dominated the world. But then it declined. Again, the crucial change was in people’s minds. As the historian Correlli Barnett chronicled, the great-great-grandchildren of the empire builders withdrew from commerce, tried to rise above practical knowledge and had more genteel attitudes about how to live.

This history is relevant today because 65 percent of Americans believe their nation is now in decline, according to this week’s NBC/Wall Street Journal poll. And it is true: Today’s economic problems are structural, not cyclical. We are in the middle of yet another jobless recovery. Wages have been lagging for decades. Our labor market woes are deep and intractable.

Um, not really. Two world wars and a Great Depression did in the British Empire. Plus some other stuff. In America, conservatives have won politically in some ways so tax rates and union membership are down from where they were during the Golden Age* of the post-war years, 1945-1973.

The recent crisis and slump was caused by the global savings glut and a housing bubble which was enabled by conservative policy decisions.

Krugman writes that Japan actually did an okay job after its real estate bubble burst in the late 1980s. Not enough, but could have been worse.

Yet the picture is grayish rather than pitch black. Japan’s economy may be depressed, but it’s not in a depression. The employment picture has been troubled, with a growing number of "freeters" living from temporary job to temporary job. But thanks to those government job-creation plans, the country isn’t suffering mass unemployment. Debt has risen, but despite constant warnings of imminent crisis -- and even downgrades from rating agencies back in 2002 -- the government is still able to borrow, long term, at an interest rate of only 1.1 percent.

In short, Japan’s performance has been disappointing but not disastrous.

DeLong on CPAN. He mentions what he would have recommended to Obama in December 2008.

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* Obviously wasn't a golden age for women, blacks, Latinos, and LGBTs.