You Can't Keep Doing The Same Thing

At least that's my take on Harold James' column.  Another way of saying it is that things go in cycles.  Here's his summary of how the American, European and Chinese economic systems have failed to beat the economic cycle:

So, is there any absolutely sure way of organizing economic life? If the quest is for a way of securing perpetual security or dominance, then the answer is “no.”
Underpinning comparisons of different models is the wish to find an absolutely secure way of generating wealth and prosperity. In a market economy, however, competition rapidly leads to emulation, and high profits associated with an original innovation turn out to be transitory. From a longer-term perspective, there are only temporary surges of relative wealth, just as there are only temporary surges of apparent success in a particular way of doing business.
During the Industrial Revolution in Western Europe in the late eighteenth and early nineteenth centuries, the pioneers and innovators in textiles, steel, and railroads were not, on the whole, rewarded with immense riches: their profits were competed away. The late nineteenth and the twentieth century produced a different sort of growth, because public policies and resources could be used to protect accumulated wealth from the otherwise inevitable erosion stemming from competitive pressure.
Behind the idea of a particular model of growth was the belief that a sensibly ordered state could somehow capture and eternalize the fruits of economic success. Like it or not, states cannot organize themselves in that way any more than individuals can.

In the world economy, we in the West will not be able to maintain the much higher standard of living relative to the rest of the world.  The main question is how well we'll be able to share the pain.  So far, it hasn't been too impressive.  One positive, though, we've managed to decrease both oil consumption and miles driven.  That helps to move a little closer to balancing our current accounts.