Lessons from a Crisis

Is it time to look back on the crisis, which started in the lull of summer 2007 with the announcement by the bank Bear Stearns of the collapse of two hedge funds? Some will say it has not ended yet, and it is too early. Moreover, it is true that hiccups in the recovery and fears of a “double dip” in the U.S. call for caution. Others retort that it is the right time, because the worst is over, and today’s clouds have nothing to do with yesterday’s hurricane, when the world was in the eye of the cyclone from the end of 2008 through the beginning of 2009. The more clear-sighted will note simply that it is never too soon to reflect if we want to avoid the same reasons causing the same effects. Three years since the start of the great recession, the reality is simpler than we would like to believe: Certain lessons have been learned — others not.

What was well and truly a crisis of expertise fits into the first category. Ultra-specialized economists, blinded by an unstable growth rate, in general did not see the impending cataclysm. The rare few that did were not heeded. Worse still, during the storm they were hardly more useful. Well, in mid-2010, they are actively questioning and reviewing their work methods.

Lessons are starting to emerge less clearly, but all the same, in another field: the role of political power. Public officials everywhere, coming to the aid of the economy during the catastrophe, took the wise decision not to question the free market economy that remains the most efficient lever to create wealth. Riddled with debts and conscious that taxpayers will not reach into their pockets a second time, they try to invent what one would call — to use the seductive expression of Jean-Pierre Jouyet, the president of the Financial Markets Authority — an economic welfare state. Hence, the American financial reform. The Europeans are not yet convinced that their social welfare state will have to be less general and more focused if it wants to survive.

On the other hand, no answer yet exists to a much more difficult question: How to give back jobs to 50 million unemployed people in the developed world when the crisis has only created 17 million? The end of the economy, dominated for three centuries by the West, by itself changes everything, whereas Europe is skating before the upset has even really started.

Until now, the belief has been that training and innovation would suffice to restart the machine to create and preserve our business model. This is probably true. However, the path is proving more difficult after the crisis than before. It is this lesson we must now learn.