Let us think anew

Opinion: June 21, 2012 at 12:00a.m.

By Peter Goldmark

Newsday

Last week we were told in cold numbers what Americans already felt: The wealth of American middle-class families — mostly the saved value stored in their homes — plummeted in this decade back to where it was in the early 1990s.

For two decades, the numbers show us, we floated pleasantly upward on bubbles. The dot-com bubble, the consumer-credit bubble, the mortgage-bubble - we just kept floating until, inevitably, we crashed.

We’re not alone. Forty percent of Spanish youth are unemployed. The various crashes under way in various European countries today are, likewise, the results of living in bubbles for the last two decades. They were just different bubbles: overextended banks and unaffordable government programs, to name two.

A friend from Europe and I have dinner together. He says he loves America, that he always defends the country when others criticize it. “But everything is changing,” he says, “isn’t it?” He tells me that the machinery of European self-governance and economic policy-making has not proved equal to the task of stabilizing the continent’s finances. “I hope it is different in America,” he says.

Wholesale changes

My European friend is concerned that the challenges the Western world faces on both continents may bring wholesale changes in the way we live. “After all our hope about building a new Europe,” he says, “is it that we are at the end, not the beginning, of that period?”

In the realm of war and national security we are also in a new world that we had not foreseen, and which we are just learning to understand. The United States and Israel worked together to attack Iran’s weapons labs with a computer virus called Stuxnet. Whose facilities, what countries, are not vulnerable to this kind of attack? The United States now uses unmanned drones widely both for combat and for surveillance. Are we prepared for the day when someone sends drones over us — for surveillance, or possibly a targeted assassination? Will the first party to do that be not a foreign power, but a Mexican drug lord?

As I have frequently written, I see real problems ahead, both for the United States and for Europe. New technology, combined with the globalization of finance and the drug and weapons trades, has meant that human activity has jumped the limits of the national institutions on which we once relied to manage our public business. These same changes, plus the rise of new Asian, Latin American, and oil-based economies, have marginalized such Atlantic-based international structures as the World Bank, the International Monetary Fund and the World Trade Organization, which all functioned fairly effectively in the second half of the 20th century.

Too late?

Throughout history, we humans have usually learned to adapt by experiencing a disaster and then acting to make sure it won’t happen again. Now even once may be too late.

I hear from a visiting Greek businessman of the chaos and uncertainty in Greece. He tells me of old people, their pensions slashed, who struggle to find enough food each day, and then are robbed on the way back to their apartment — whose rent they can no longer pay. That’s a degree of unraveling we have barely begun to grasp. None of us, and especially not the Europeans, thought that could happen in Europe.

Peter Goldmark, a former budget director of New York State, is a member of the State Budget Crisis Task Force co-chaired by Paul Volcker and Richard Ravitch. He wrote this for Newsday. Distributed by MCT Information Services.