Paul Krugman is still hammering away in The Great Abdication:
None of this should be happening. As in 1931, Western nations have the resources they need to avoid catastrophe, and indeed to restore prosperity–and we have the added advantage of knowing much more than our great-grandparents did about how depressions happen and how to end them. But knowledge and resources do no good if those who possess them refuse to use them.
And that’s what seems to be happening. The fundamentals of the world economy aren’t, in themselves, all that scary; it’s the almost universal abdication of responsibility that fills me, and many other economists, with a growing sense of dread.
My economist colleague Karl Seeley and I have been having an ongoing blog-volley that began with Krugman. Seeley’s latest, When is an economy not an ecosystem is precisely about the need to make intelligent use of banking resources:
If some piece of the economy (Ahem, banks) is in private hands and is making a hash of its job, we should look at different ways of getting that job done. We have more foresight than the dinosaurs and, after all, even our foresight is a product of evolution. We should consider using it.
What Seeley and I have been discussing is how what is missing from Krugman’s injunction to “restore prosperity” is the desperate need to re-tool the built environment to reduce resource use for a sustainable future. We do have the resources to borrow and to spend, but they must be spent on jobs and projects that will put us on a radically more sustainable path.
Update 27 June 2012: See Walmart Socialism – The Storm of Utopia for more analysis.