No, I think what people are saying is that infrastructure investment is not likely to help the economy much. The Japanese government tried to pull out of their recession/depression a decade ago with huge infrastructure investments, driving their national debt to 130% of GDP and it still didn’t help. It’s been suggested that they were not smart about where they spent the money -lots of bridges to nowhere- but there’s no reason to think we’d be any smarter.

On the other hand, we definitely need to invest in infrastructure for its OWN sake – crumbling bridges, etc, are dangerous, and slow down transport, and waste gas (e.g., because trucks have to take alternate routes)

WRT fiber optic – I can’t get fiber optic in my town either and when I looked into it, it was not lack of investment capital that caused the problem – it was exclusive contracts by competitors like Comcast that locks fiber-suppliers like Verizon out. This is an example of where we can induce lots of infrastructure investment (using Verizon’s money) by just changing the laws on exclusive internet/cable contracts.

So I guess the people who suggest this as a non-starter are willing to let more bridges fall down and for the roads and rail lines to just fall apart to the point that we are no longer even able to have our local commerce work. Here in Boston and the suburbs water main breaks are all to common. You can’t help but to wonder about the bridges, some look like they are ready to fall down. I live in Boston, yet I can’t get a fiber optic connection.

Is this what people are saying?

My wife is from Japan, she has friends who live in the middle of know where in Japan who have this.
They live in a rural community and they have a fiber optic cable connection. It’s the reason they moved there both work from home in a high tech industry. I live 20 minutes from downtown Boston and I don’t. What’s wrong with this picture.

I don’t think that investing in this is the one panacea that will save our economy. However it seems to me that not investing in this seems foolish.

I agree with PART of your thesis. I agree that it was a failure of individual reponsibility that caused the explosion of mortgage defaults, and not anything that Wall Street did. Just as I am not required to spend up to my credit card’s spending limit, likewise the availability of easy credit is no excuse for people to take out ridiculous mortgages.

BUT, where I disagree is your claim that no regulation is required. The problem was not the defaults, per se. Only about 2% of all mortgages went into default and if risky mortgages were properly identified, packaged and tracked they would not have been bundled in with good debt obligations. In other words, they would not have brought down the system.

Furthermore, institutions with fiduciuary reponsibility took excessive risks. The lack of transparency, lack of proper assessment of mortgage quality, and excessively risky investment practices involving complex instruments that they didn’t even understand led to the failure of Fannie, and Freddie, and Lehman Brothers, and others which, by today, have resulted in a virtual freeze-up of the credit markets. Banks are now afraid to even lend to each other. Proper regulation of investment banking would have prevented this.

I thought it was very appropriate to include that clip, mainly because it illustrates my point, above. Namely that it shows the sort of reception Kuttner’s ideas will receive outside of the friendly progressive and academic environments of places like Boston or NPR.

I’m a gardener – one thing I know is that you can’t grow plants in the wrong soil. The US does not have the right cultural soil for progressive politics! That’s why we don’t have national health insurance; it’s why the farthest-left political party with significant seats in our national legislature (the Dem’s) is still in the pockets of big corporations, it’s why we can’t wrap our heads around the fact that we still produce more per-capita CO2 than any other major country, and it’s why the whole country goes ga-ga over Sarah Palin. This is a corporatist right wing country that barely tolerates liberals as long as they keep a low profile.

Right:
1. The recent failures in the financial markets and the need for Fed intervention represent a repudiation of the laissez faire economic policies of the GOP.

2. The Democrats certainly “should” be able to make political hay over this by “connecting the dots”, but they only have a short time to do it.

Wrong:
Kuttner’s idea that there is any realistic possibility to “transform” our economic culture. Kuttner’s zeal for this has the same disconnected-from-reality hubris that the Neocons’ fantasy of transforming Iraq into a Jeffersonian democracy, or Jeffery Sach’s theory in the early 90’s that the Russian economy could become anything other than the corrupt kleptocracy that it is.

Kuttner’s examples of Lincoln freeing the slaves and FDR’s New Deal overlook a fatal difference with today. Lincoln had the “encouragement” of a large well-organized, passionate grass-roots abolitionist movement in the US. FDR had the support of an equally large well-organized, passionate grass-roots left-wing labor movement.

But there is NO large well-organized, passionate grass-roots progressive movement in the US today. The American left is just a tiny vestigal and largely ineffective movement of idealists and aging hippies meeting in Unitarian church basements. It’s not an effective political force.

The sorts of change Kuttner dreams of must come from the grass roots – it can’t be imposed from the top – and grass-roots American culture is not interested in that sort of reform.

This issue will only adjust after we as a nation wake up, understand what it means to living with in your means. We need to be accountable for our personal choices, spending, and actions from top to bottom. and then hold our leaders to this standard, to vote is a good start. More government is not the answer.

The accountable parities in this falling of the markets can be blamed on us all. Spending habits into debt, the sue happy crew killing our health care system and the ability to jump into bankruptcies with a slap on the wrist madness and have been the enablers for our drug of choice, Greed.

To over simplify this and say it’s the republican philosophy that is at fault makes as much sense as saying the man is a drunk because prohibition was repelled. simply because you have a choice, agency, is not reason to find fault in the freedom.

Chris Lydon, please.

Couldn’t Paulson do a little negotiating on our behalf? E.g., “We’ll save the company if you take a modest retirement but not otherwise.”

People will start coming around to your view when they realized that Adam Smith’s “invisible hand” stole their wallets.

Having rules of the game does not equate with socialism. I mean, look at the American national passtime. The game is tightly regulated and so is the league. Does it make baseball a socialist activity?

The great thing about this country is – for a majority of people here – they can make their own decisions.

Governments do have to play a strong role in policy – regulation or not – but it is all on us.

He did say that the regulation would have be a rational and well considered.

I see your a right winger, so no matter what any progressive says you will come up with a complete negative response.

That’s fine, but how does the republican party, how are the party who are responsible for this mess, what bright ideas do they have? None what so ever.

There is plenty of blame to go around for both parties however.

Barney Frank should resign as the Chairman of the Financial Services Committee for his involvement with the Freddie and Fannie mess.

He did say that the regulation would have be a rational and well considered.

What’s your bright idea, let these people to take the bailouts and to go back to the ‘free market’.

I agree 100% with Robert Kuttner’s outlook and how to move forward.

Unfortunately as vast swaths of the American public listen to right wing radio and the power of these people is not to be underestimated.

The other issue is the republicans seem to think that we Americans are stupid. Hence the recent rhetoric on ‘change’ from McCain as he try’s desperately to change his platform in what I see as a fake, he’s a phony. Obama needs to hit hard on this economy and McCain’s voting record.

If you look back to before the Republican convention, a mere 3.5 weeks ago the republican platform was that Obama lacked experience and McCain was a maverick.

Now it’s all about some strange notion of them reforming and change and more empty rhetoric.

Maybe a lot of Americans are dumb, or in denial may be a better phrase.

Do people really think that a McCain/Palin administration would do anything that even comes near to what Mr. Kuttner is talking about?

The republican platform for the last 30 years has been to dismantle the New Deal. They hate FDR, and they hate everything he stood for. I would also like to add a lot of what guided FDR was his wife Eleanor Roosevelt who was responsible for a lot of the progressive ideas we take for granted in today’s democratic party.

http://en.wikipedia.org/wiki/Eleanor_Roosevelt

But to irresponsibly call for a politically based economy where government decides who gets the capital to replace a free market one, which seemed to be where this “progressiveness” is heading… centralized capitalists with guns… is nuts.

We need rational regulations and a government that will reverse market consolidations. Not one that is just going to let businesses become too big to fail and then take them over. Right now the “progressive” solution seems to simply let Bank of America consume all the assets of all the other banks and financial companies and then to have the government step in and run it. Sounds like a political power grab, not a way to create a healthy economy where risks are spread out among people that are actually responsible for outcomes.

If a company is too big to fail, then it is simply too big and the government should be stepping in to break it up.