Six Principles to Guide Our Recovery Efforts
1. The problems created by the most-severe recessions are typically bigger and longer-lasting than they first appear. Every year that goes by while masses of people are trapped and idled due to housing woes and high unemployment is not merely one lost year--it’s a loss that’s paid forward into future years as well, an accumulating deficit of skill, character, and regenerative ability that will restrain America’s growth potential for many years to come.
2. Again and again, our tendency in periods like this one has been to hunker down and wait for the bad times to pass. When bubbles pop and times grow hard, the animal spirits within all of us turn bearish, sometimes ungenerous, and deeply averse to risk. Unchecked, these sentiments can bias our thinking and actions in ways that are just as dangerous and counterproductive as bubble thinking itself.
3. Historically, as a result of these first two factors, we have tended to underestimate the true cost of remaining in periods like this one, and to overestimate the risks of aggressive action to try to hasten recovery. The bias in periods like this one has usually been toward doing too little; if anything, it should be toward doing too much.
4. This was not an ordinary recession, and ordinary responses will not fully end it. Boilerplate responses--cut taxes, raise spending--are insufficient given the nature and variety of these problems, and potentially dangerous if only bluntly applied. We need a combination of actions--some time honored, some novel--to restore our health.
5. True recovery is not simply a matter of jolting the economy back onto its former path; it’s about changing the path. We are in the midst of a major, global economic transformation, one that is steadily thinning the American middle class. The Great Recession has brought this into sharp relief, and in some ways has given us a preview of where America’s economy is heading. Many of the deepest economic trends that the recession has highlighted will take decades to fully play out. We can adapt successfully to them, if we start now.
6. Culture matters. A cultural separation is accompanying and reinforcing the economic sorting of Americans into winners and losers. Much of the nonprofessional middle class is slowly coming to resemble the poor in its habits and values; the rich are simply floating away from everyone else, not just financially but emotionally too. Both developments are profoundly unhealthy. Solutions to the problems of this era cannot be only economic. They must be cultural as well.
“Fascinating…An important, far-thinking consideration of the reverberations--social, political, psychological--of the financial crash.” --Publishers Weekly (starred)
“Books attempting to explain the economic situation are a dime a dozen these days, but my pennies go to Pinched. Shorn of jargon, this tightly written book distinguishes itself from the crowd…It's great to find a book that identifies solutions, not just problems.” --Chicago Tribune (Editor's Choice)
“Outstanding. PINCHED has the potential to be a defining book about this era economically, how we should think about it, and what we should do about it. It does a better, clearer job of explaining this painful period than anything I've read recently. Don Peck puts together the pieces of today’s puzzle—the gender effects, the generational effects, the political ramifications of a slowing economy—in a way that makes obvious sense, once he has pointed them out. This is a wonderfully helpful and clarifying book.” --James Fallows
"A gripping and sobering account of the true costs of the financial boom-bust cycle, full of sensible analysis and level-headed suggestions. Policymakers on both sides of the aisle will ignore this book at their peril. Read PINCHED and run for office yourself." --Simon Johnson, Professor of Entrepreneurship at MIT Sloan School of Management, and co-author of 13 Bankers: The Wall Street Takeover and The Next Financial Meltdown
"Every era has its politico-economic text. Don Peck may well have written the one for the post financial crisis era. His concerns for what a weak economy will leave in its wake are proper and pressing. We would make wiser policy if every policymaker read this brilliant book." --Larry Summers
"PINCHED is a must read for anyone trying to understand not just the causes but the long-running consequences of the Great Recession. Don Peck shows how the economic crisis is reshuffling our economic and social order, and how devastating the effects of long-term joblessness and diminished expectations can be. He outlines a new, broader but more focused strategy that puts job creation and economic recovery at the center of the nation's agenda." --Richard Florida, author of The Great Reset and The Rise of the Creative Class
"Timely and important." --Chrystia Freeland, The New York Times and International Herald Tribune
"Compelling and disturbing ...Peck explains, with coolness and concision, the brutal new realities faced by Americans without college degrees ... He makes a compelling case that the most pressing problem the U.S. faces is not the bloated national debt, but the hollowing of the middle class." --Jeffrey Goldberg, Bloomberg