NPR Marketplace Commentator David Frum: Old assumptions equal a stagnant economy:
Supposedly, the recession ended last summer. Yet the percentage of adult Americans at work is lower now than it was six months ago. Businesses continue to shed jobs faster than they create them.
The risk that employment will decline further as the Obama Administration's fiscal stimulus ends is very real. Consumers are not spending, because they feel poor -- and getting poorer. They borrowed a lot of money in the 1990s and 2000s. Their equity in their homes has shrunk or disappeared.
These wretched figures should force us to rethink old assumptions.
The 2007-2008 economic collapse was a really, really big calamity. Yet, we have not taken that calamity's big lessons. Yes, we've tightened bank regulation a little. It will be tougher in the future for banks to bet 30 times their capital that uncredit-worthy borrowers will somehow find the money to repay huge loans. But the idea that home ownership is for everybody? That capital gains from housing will compensate ordinary Americans for stagnant wages? That we can raise living standards while importing a million low-wage workers every year?
On those fundamentals, Albert Einstein's old lament still holds: Everything has changed -- except our thinking.
