It was arguably profligacy, not war, that brought down the Roman and British empires, and today's United States seems ever more at risk of a similar fate. Like dozens of Western countries staggering under debt loads, the United States faces a massive deficit -- $1.3 trillion this year alone. If there is any hope of climbing out of that hole, the U.S. federal government will need to cut spending in dramatic ways.
More than any other political figure, it has been Paul Ryan, a charismatic rising star among Republican lawmakers and the House Budget Committee chairman, who has led the charge, preaching a new politics of austerity as the only antidote to the crisis. As Ryan wrote in the Wall Street Journal in April, "The threat posed by our monumental debt will damage our country in profound ways, unless we act." To be sure, the Wisconsin congressman's "Path to Prosperity" plan, passed by the House of Representatives in April before being defeated in the Senate, was far from perfect. But unlike others in both parties, Ryan made an effort to do business with his political rivals (Obama called his plan a "serious proposal"), and he undoubtedly set the terms of the intense debate that followed.
Muse The Rolling Stones. After all, you can't always get what you want.
Stimulus or austerity? It's a false choice. Prosperity is the real answer.
America or China? America.
Arab Spring or Arab Winter? Arab Spring.
Reading list Lords of Finance, by Liaquat Ahamed; Endgame, by John Mauldin and Jonathan Tepper; Cicero's "Philippics" and Their Demosthenic Model, by Cecil W. Wooten III.
Best idea Corporate tax reform.
Worst idea Raising tax rates on individuals and successful businesses.
It's been a bad year for the credibility of the world's financial institutions, battered by debt crises in Europe and America and by China's economic growing pains. But amid the bank panics and bailout frenzies, Robert Zoellick's World Bank has urged powerful countries not to overlook the plight of the poor. In its fifth year with Zoellick at the helm, the bank has been a model of good acts in lean times: The World Bank increased assistance to North African countries rattled by the events of the Arab Spring, while pledging at its fall meeting with the IMF to help fix the problem underlying both economic and political crises worldwide -- unemployment.
Zoellick has also launched an effort to rebrand the World Bank as a source not just of handouts but of information that allows individual countries -- rich and poor alike -- to help themselves. The bank recently made public thousands of data sets that used to require payment. It's part of Zoellick's effort to "democratize development economics," in his words. Zoellick insists that emerging markets shouldn't have to scrape by on outside assistance; instead, foreign aid should be integrated with private investment and entrepreneurship. "The goal would not be charity," Zoellick said in September, "but a mutual interest in building more poles of growth."
Muse Yogi Berra: When you come to a fork in the road, take it.
Stimulus or austerity? Structural reforms for growth.
America or China? Work together -- with others -- as responsible stakeholders.
Arab Spring or Arab Winter? A climate shift -- for a decade or more.
Reading list The Long Ships, by Frans G. Bengtsson; Other Clay, by Charles R. Cawthorn; Robert Morris: Financier of the American Revolution, by Charles Rappleye.
Best idea Gender equality is smart economics.