In Search of Optimism

Aspen, Colo.—Even in Shangri-La they are worried about the American economy this holiday week.

You don't see the fear at first glance in this wealthy, carefully-tended alpine village. Tiny condos still cost millions and the whine of power saws fills the air along the cottonwood-shaded streets. But you can feel a pervasive unease in the topics and tone of the panel discussions on the outskirts of town at the Aspen Institute Ideas Festival.

In this campaign year, the take-away is clear: Whoever the next president is (and most of the panelists here assume it will be Barack Obama) will face a crushing agenda. A new administration begins with a fund of hope; this next one will need an ocean of it—and will need a Lincolnesque skill, patience and fortitude to bring us through.

Opinion polls are one measure of public mood (which is dour); another is this gathering's schedule. In conference rooms and music tents, experts from business, government and academia are pondering a range of daunting issues, such as national security in an age of terror, the rise of a potentially hostile China and Russia, the burdens of carbon-based energy, the shortcomings of our educational system, global religious conflict, and a pervasive sense that our own political culture is cripplingly unable to deal with such problems.

Typical of the somber mood was a colloquy with Jamie Dimon, the affable grandson of Greek immigrants who runs J.P. Morgan Chase. Walter Isaacson, who runs the institute, rightly introduced Dimon as "the leading financier in the country, if not the world."

In a vast tent filled with 1,000 people, PBS's Charlie Rose led Dimon through a reconstruction of recent near-cataclysms on Wall Street and into a discussion of his view of the economy. As the two were speaking, crude oil was hitting the previously unthinkable level of $142 dollars a barrel and the stock market was officially entering bear territory.

Dimon was personally impressive—perfectly comfortable juggling a hundred global factors at once for his company. But what he had to say about the world was not as reassuring.

"The economy is virtually unfathomable," he began. "I hope we have hit bottom, but I can't really say."

On the upside, he said, we all need to maintain some historical perspective. In 1987, he reminded the crowd, the stock market had dropped 25 percent in one day. The current depressing run was months in the making. Nor is the situation like 1982, when we faced a recession driven by sky-high interest rates. By historical standards, unemployment is relatively low at 5.5 percent (the figure held steady this week.)

But as a country we face rising economies elsewhere around the world—trading partners increasingly turned competitors—energy costs and above all a lack of political will to use government well.

The levee preventing the flood of recession, Dimon said, was employment. "We haven't seen big job losses yet," he said. "If I was going to keep my eye on one thing, that would be it."

To prevent such losses, he said, government needed to target new tax cuts at "lower-paid people" and at keep mortgages flowing to them. For the next six months to two years, we can't raise taxes, he said.

Government action is the key, Dimon said. To make his point, he asked the participants whether they were "pissed off" about the high price of gasoline at the pump. Most hands shot up.

"YOU HAVE NO RIGHT!" Dimon declared. "We almost deserve it," he said, because as a country we had dithered for decades rather than transforming our energy economy. "We knew about this in 1974!" he said. The crisis we face now is the result of a "lack of political will."

And so it went in the tent, and elsewhere. Even Carlos Gutierrez, the Bush administration's calmly optimistic Secretary of Commerce, took note of the tone—and the reality. The federal deficit is low as a percentage of the whole economy, he noted; unemployment is lower than the average of past decades. And yet the mood is somber.

The reason, he said, is that "everything is stalled" in Washington. No one there seems to be able to deal with, or reach an agreement on, the myriad problems we face, from energy to immigration to the future of tax policy. This situation can't last, he said, if we are to move forward as a country.

I wish I could say that the American elites here—people with money, connections or world-class expertise, or in many cases all three—were brimming with optimism. But they aren't, which means that they are not much different from you and me.