The Headwaters Strategy for the Save and Invest Economy

We often speak of a key part of our role here in the Asset Building Program as being involved in the "Headwaters Strategy." That is, if I can mix my metaphors, laying the groundwork and sowing the seeds for policy change in the future. You can do this in a variety of ways, research, policy papers, op-eds are a great example if you can get them accepted.

President Obama and his team seem to be doing their version of the "Headwaters Strategy" as well, particularly on their long-term economic vision. In his "House on a Rock" speech, President Obama called for America change it's economic foundation. He said:

"We must lay a new foundation for growth and prosperity -- a foundation that will move us from an era of borrow and spend to one where we save and invest; where we consume less at home and send more exports abroad." (Italics mine)

This isn't the first time that this sort of signal has been sent. It also seems that we aren't the only ones who've been listening. David Brooks (one of "The Six Top Republicans Obama Listens To" according to Marc Ambinder), appears to be listening to the President in return.

In his column today, "The Great Unwinding," fully predicts a transition to a "Save and Invest" economy:

"Americans aren’t borrowing the way they used to, but the accumulated debt is still there. Over the next many years, Americans will have to save more and borrow less. The American economy will have to transition from an economy based on consumption and imports to an economy with a greater balance of business investment and production. A country that has become accustomed to reasonably fast growth and frothy affluence will probably have to adjust to slower growth and less retail fizz. "

It's a very good column, highly recommended. He adds that: "The members of the Obama administration fully understand this and are brimming with good ideas about how to move from a bubble economy to an investment economy. Finding a political strategy to accomplish this, however, is proving to be very difficult. And getting Congress to move in this direction might be impossible."

Well, sure, it's going to be hard (but we've got some ideas that might help), but it's nice to see that the "Headwaters Strategy" is starting to pay some dividends.