Nobel laureate and Yale economics professor Robert Shiller has pretty much captured the economic zeitgeist in a new post on Project Syndicate.
On a recent speaking tour of Japan, he writes, he was struck by the message of aggressive action to revive the economy that Prime Minister Shinzo Abe has been doubling down on since he took office in 2012.
But that kind of narrative has been lacking in the rest of the world. Specifically, political leaders have failed to incorporate the parts of the economy that have been doing well — mainly tech — into a tangible case that the future will be better.
Shiller’s words are striking:
To understand why economic recovery (if not that of the stock market) has remained so weak since 2009, we need to identify which stories have been affecting popular psychology. One example is the rapid advance in smartphones and tablet computers. Apple’s iPhone was launched in 2007, and Google’s Android phones in 2008, just as the crisis was beginning, but most of their growth has been since then. Apple’s iPad was launched in 2010. Since then, these products have entered almost everyone’s consciousness; we see people using them everywhere — on the street and in hotel lobbies, restaurants, and airports.
This ought to be a confidence-boosting story: amazing technologies are emerging, sales are booming, and entrepreneurship is alive and very well. But the confidence-boosting effect of the earlier real-estate boom was far more powerful, because it resonated directly with many more people. This time, in fact, the smartphone/tablet story is associated with a sense of foreboding, for the wealth that these devices generate seems to be concentrated among a tiny number of tech entrepreneurs who probably live in a faraway country.
These stories awaken our fears of being overtaken by others on the economic ladder. And now that our phones talk to us (Apple launched Siri, the artificial voice that answers your spoken questions, on its iPhones in 2010), they fuel dread that they can replace us, just as earlier waves of automation rendered much human capital obsolete.
This is important stuff. Shiller doesn’t call out any one leader by name, and admits shaping upbeat narratives can be difficult. But he says those in a position to do so should be making much stronger attempts.