Many scholars are at work on an extended analysis of the financial crisis. Yet it's not too soon to draw some conclusions about what went wrong, and what leaders can do to set things right.
Throughout my career, America has seen so much economic growth that it was easy to take it as a given. We prospered from the productivity of the information age. But, we started to forget the fundamentals and lost sight of the core competencies of a successful modern economy. Many bought into the idea that America could go from a technology-based, export-oriented powerhouse to a services-led, consumption-based economy – and somehow still expect to prosper.
That idea was flat wrong. And what did we get in the bargain? We've seen a great vanishing of wealth. Our competitive edge has slipped away, and this has hit the middle class hard.
As a nation, we've been consuming more than we earn, saved too little and taken on far too much debt. Growth in research and development has slowed. Our country has made too little progress on some of the defining challenges of our time – like clean energy and affordable health care. Our budget and trade deficits have reached levels that are clearly not sustainable.
Compensation systems have fallen out of balance. You know something is wrong when a mortgage broker is pulling down $5 million a year while a Ph.D. chemist is earning $100,000. Average real weekly wages have declined since 1980, meaning that we have been unable to provide a rising standard of living for the majority.