Tom Friedman: Green the Bailout

[David Farber <dave () farber net>]

From the New York Times -- <http://www.nytimes.com/2008/09/28/opinion/28friedman.html?partner=rssuserland&emc=rss&pagewanted=all 
>

Op-Ed Columnist
Green the Bailout

By THOMAS L. FRIEDMAN
Many things make me weep about the current economic crisis, but none  
more than this brief economic history: In the 19th century, America  
had a railroad boom, bubble and bust. Some people made money; many  
lost money. But even when that bubble burst, it left America with an  
infrastructure of railroads that made transcontinental travel and  
shipping dramatically easier and cheaper.

The late 20th century saw an Internet boom, bubble and bust. Some  
people made money; many people lost money, but that dot-com bubble  
left us with an Internet highway system that helped Microsoft, I.B.M.  
and Google to spearhead the I.T. revolution.

The early 21st century saw a boom, bubble and now a bust around  
financial services. But I fear all it will leave behind are a bunch of  
empty Florida condos that never should have been built, used private  
jets that the wealthy can no longer afford and dead derivative  
contracts that no one can understand.

Worse, we borrowed the money for this bubble from China, and now we  
have to pay it back — with interest and without any lasting benefit.

Yes, this bailout is necessary. This is a credit crisis, and credit  
crises involve a breakdown in confidence that leads to no one lending  
to anyone. You don't fool around with a credit crisis. You have to  
overwhelm it with capital. Unfortunately, some people who don't  
deserve it will be rescued. But, more importantly, those who had  
nothing to do with it will be spared devastation. You have to save the  
system.

But that is not the point of this column. The point is, we don't just  
need a bailout. We need a buildup. We need to get back to making  
stuff, based on real engineering not just financial engineering. We  
need to get back to a world where people are able to realize the  
American Dream — a house with a yard — because they have built  
something with their hands, not because they got a "liar loan" from an  
underregulated bank with no money down and nothing to pay for two  
years. The American Dream is an aspiration, not an entitlement.

When I need reminding of the real foundations of the American Dream, I  
talk to my Indian-American immigrant friends who have come here to  
start new companies — friends like K.R. Sridhar, the founder of Bloom  
Energy. He e-mailed me a pep talk in the midst of this financial  
crisis — a note about the difference between surviving and thriving.

"Infants and the elderly who are disabled obsess about survival," said  
Sridhar. "As a nation, if we just focus on survival, the demise of our  
leadership is imminent. We are thrivers. Thrivers are constantly  
looking for new opportunities to seize and lead and be No. 1." That is  
what America is about.

But we have lost focus on that. Our economy is like a car, added  
Sridhar, and the financial institutions are the transmission system  
that keeps the wheels turning and the car moving forward. Real  
production of goods that create absolute value and jobs, though, are  
the engine.

[snip]




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