The Lost Decade

I found Paul Krugman's The Big Zero - how the first decade of the twenty-first century eroded value rather than creating - interesting. This article is deservedly having an impact and references to the Big Zero are springing up everywhere, at least in the liberal press. Many people may actually disagree, particularly in India, which has gained significantly over the last decade, and thousands, if not millions, have their lives transformed by the emergent opportunities in various industries. So, it may be worthwhile to look at Krugman's assessment on balance, and see whether it is fair to write off this decade as a time when nothing happened.

In all fairness, Krugman was writing about America. As most American commentators tend to do, he treated the American economic universe as his primary field of observation. And, no doubt, for all the talk of recovery, the mood is particularly gloomy in America. America lost, over all, during the last ten years. It is not just about the economy. Krugman points that there is an erosion of income and house prices, and the stock values literally stalled. Besides these, the loss of American prestige was immense. In terms of what Joseph Nye will call Soft Power, America ceased to be the world's only super 'soft' power - American values, its economic genius, its moral superiority, all were called to question. So, in balance, Krugman's observation does not just paint a correct picture of the economic reality, it also reflects an accurate picture of the sentiments in America.

This assessment may actually hold true - at the collective level - for all economies across the world. For all the enthusiastic talk about the shifting of balance of the world economy, one has to remember that the whole world commercial system revolves around the American economy. The American economy going underwater helps no one, not even the Chinese. I have previously thought that the currently resurgent Keynesian orthodoxy of state intervention may finally push some countries over the top, and if this happens to be America, which is still borrowing freely, this will take down the whole world and return us to stone age economics. On a broader scale, therefore, I think the current capitalist framework has been undermined, and that is necessarily not good because no one seems to have a valid alternative.

The social pessimism is also widely shared. George W's ill-advised wars, in the aftermath of 9/11, started, but in no way been the only contributor to, the general erosion of faith in modern governments. This decade has seen an unprecedented rise of faith across the world. This is not just about Muslim fundamentalism, but also Hindu jingoism in India and Christian supremacist thinking in the Western countries. History seems to be moving in circles: As the rise of nation-states once undermined the religion's hold on the matters of state, religious faith is now making a comeback at the expense of nationalism. Nationalism has been pushed to the limit by hangovers of our rulers who read outdated military strategy books and wrongly assessed people's appetite for long and costly wars in Western democracies. To die for one's country isn't glorious any more - however much British tabloid press may urge the working class teenagers to believe - and in the world of reality show celebrities, it is increasingly difficult to find people who will trade Helmand for the Big Brother House.

So, nationalism, it seems, will soon be without its defenders. It has anyway long been devoid of its causes, particularly after it has been decided that democracies should not fight democracies and white men should not fight white men. One may say that it is possible to spot a new trend of supernationalism, or racism or clash-of-civilization, whichever way one calls it, and therefore wars may remain an essential part of our history. But, it will surely keep getting difficult to find people who will want to go and kill 'some foreign bastards' if things keep getting cosier at home. In that sense, Republicans may be right: America may lose the will to defend itself if healthcare becomes universally accessible and it does not cause so much misery and deprivation among poor families.

So, I guess the profound pessimism, the big zero feeling, is primarily arising because we can't see ahead. All the things which held our lives together for past fifty years look wobbly, and we are facing an acute crisis of identity. Notwithstanding the success of the young Engineer in India, who bought his house at 30 and was the first one to travel abroad in his family, the world at large suddenly seems to be heading nowhere. This is a very unsettling feeling.

However, I shall end with a historical parallel. This is not very unlike how people felt at the end of the first decade of the last century. After the years of stability and certainty, England, then the pre-eminent power, was facing an Edwardian identity crisis, and suddenly, its soft power was eroding. The lives were getting better in Germany, and there was resentment about the 'unfair' system of the world. The colonies were becoming restless and the new faith - nationalism - was spreading beyond Europe. It was a time of great unrest, then; our big zero decade has the potential to wreck similar havoc.


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