The year 2011 was the year of serial brinkmanship. Politicians in the United States and Europe took turns kicking the can down the road or, more accurately, to the edge of the cliff. Three times on this side of the Atlantic we faced the threat of government shutdown because of congressional inability to agree on a strategy for dealing with the mountain of past promises beginning to come due. Each time, the result of this “to the brink” stubbornness was a stiffening of partisan finger-pointing and a last-minute deal based on another set of short-term promises that no one liked and no one kept. Debt commissions and supercommittees were appointed, dutifully held their meetings and reported findings the politicians ignored, or didn’t report any findings because they knew they would be ignored. Even the spectacle of Standard & Poor’s downgrading its rating of U.S. debt was followed by a rush to buy more Treasury securities. No one seems to have a clue what the effects of policy choices will be or what is actually going to happen next week, much less next year.

In conveniently different months, our colleagues on the other side of the Atlantic held a similarly frenzied series of meetings to propose grand schemes involving making more new promises to cover the costs of whatever share of the old ones they thought they had to pay. These were each announced to great fanfare as the salvation of the European Union; stock markets rallied for a week and then collapsed as people started to read the details of the agreement. Then the whole process was repeated several months later.

Throughout the rest of the world, the flood of money printed by the Federal Reserve and pumped into Chinese real estate by government stimulus projects sloshed around, driving up commodity prices and forcing developing economies to set controls on capital imports and devalue their currencies. The price of gold rose to record highs. And then, suddenly, it didn’t. Facebook, Groupon and LinkedIn were worth billions — in general expectation — and then they weren’t. Again, no one seems really to know what is going to happen next. But widespread ignorance doesn’t prevent millions from lurching one way then another for fear of missing whatever train may (or may not) be leaving whatever station at whatever time.

In short, the world economy is very, very jumpy.

Nonetheless, underneath these policy storms and nervous Nellie investors, some signs of new economic life are beginning to emerge. I hope they will be as resilient as the crocuses and daffodils beneath the frozen sod and emerge later this spring. While the plight of millions of unemployed remain unsolved, those who do have jobs seem to be exhibiting some confidence: Holiday sales were up, housing prices seem to have stabilized and both households and businesses that have been making do with older cars, trucks, furniture, appliances and other equipment are beginning to let go of the ghost and face the fact that they have to replace stuff. This trend represents good news for our economic future — if we can keep from scaring those beginning to consider new spending back into their protective cocoons with more unproductive policy stalemates.

While presidential politics will probably replace debt negotiations as the political storm at the national level in 2012, that battle need not consume us here in Maine. Indeed, the gradual disappearance of federal stimulus money and the likely absence of any major new federal initiatives this year reinforces the need to focus on local opportunities.

Maine’s aging population doesn’t want or need to live in large, nearly empty suburban houses. Building them more appropriate living quarters could revive the local construction industry. Similarly, devoting more of our higher education resources to job-specific training programs could simultaneously strengthen our manufacturing sector and help provide buyers for the homes aging boomers would like to unload. Such training programs could also help attract young workers searching for ways to escape the commuting and financial burdens of living in large metropolitan centers to our south. Finding ways to deploy digital Internet connections that allow increased telecommuting could also help new entrepreneurs thrive in Maine. In 2012 we need to replace the theme of national brinkmanship with the theme of local control of our own destiny — one that should be well understood here.

Charles Lawton is senior economist for Planning Decisions, a public policy research firm. He can be reached at:

clawton@maine.rr.com

 

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