Crashed: How a Decade of Financial Crises Changed the World

by Adam Tooze

In an astonishing makeover of America’s recent economic history Summers proposed that for at least two decades American economic growth had been on weak foundations. To achieve no more than a “normal” rate of growth it had depended on “abnormal” financial bubbles. Looking back over recent decades, Summers asked in a subsequent speech, “[C]an we identify any sustained stretch during which the economy grew satisfactorily with conditions that were financially sustainable? Perhaps one can find some such period, but it is very much the minority, rather than the majority, of the historical experience.”11 It was a remarkable indictment of the policy consensus of which Summers himself had been a defining figure.12 It had dramatic implications for current policy. If America simply waited, the long-awaited rebound from the crisis of 2008 might never arrive. To address the chronic shortfall in investment, what Summers advocated was a new era of government activism. The United States would not match China, of course. Nor was that appropriate. But the conditions were right for a big burst of public investment. This would rebuild America’s infrastructure, and in so doing it would address the more fundamental questions posed by Detroit. Physical reconstruction would be a means to restore a sense of national coherence and national pride. As Summers remarked on another occasion: “Look at Kennedy airport. It is an embarrassment as an entry point to the leading city in the leading country in...

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