The path of extended decline 
A devastating piece in today’s Financial Times on the likely shape of a second Bush term economic policy. Adam Posen writes (subscribers only):
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Markets tend to assume that the US political system will prevent lasting extremist policies so, even now, observers discount the likelihood of the Bush administration fully pursuing — let alone passing — this economic agenda. If the thin blue line of Democrats and the responsible Republican moderates in the Senate bravely fulfil their constitutional role, perhaps the damage will be limited. If not, we can foresee the US economy following the path to extended decline of the British economy in the 1960s and 1970s and of Japan in the 1990s. |
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But, as Japan and the UK showed, once the political-economy dynamic is in motion, it takes years for the opposition to reverse it, even as its failures become obvious. That long-term preclusion of alternative policies is ultimately the goal of the Bush economic agenda.
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