Task is to build a new economy, not resurrect the old

Federal economic policy has taken more twists and turns than a drive in the mountains, and the smartest guys in Washington are no closer to consensus than they were two months ago. There is, however, one critical point about which there should be no confusion. We cannot afford to resurrect the same economy we had in 2007. That economy, when just about everyone who owned anything was rich and everybody else was out of luck, was a fraud, based on wildly inflated asset values, driven by unbridled speculation and riddled with stratospheric levels of debt designed to magnify artificial paper gains.

The Lowcountry was particularly subject to the delusion that there was free money to be had and that real estate was its well-spring. Land that little more than a decade ago sold for $1,000 per acre was selling for $10,000 to $20,000 per acre, often to buyers who had never set foot on the property. Almost everybody seemed to be in on the deal, from New York investors buying thousands of acres of timber land along the Ashley River, to widows from Ohio buying one-third acre lots in Jasper County, to local house-flippers aiming to double their money in three months. The last few months' collapse has had severe consequences, but a return to more rational real estate values and more responsible expectations is a blessing.

Unfortunately, confusion clouds the debate. Even its terminology implies that if we could just turn the calendar back, things would be fine. The economy has "weakened." We work on "the recovery." Congress is considering a "stimulus." Unless we admit our challenge is to build a new economy, fundamentally different from the 2007 version, 10 years from now we are likely to see ourselves in worse shape than we are today.

We can take inspiration and some lessons of caution from the mother of all fiscal stimuli during the 1930s. First, there is the risk of overreaching. For example, FDR's Agricultural Adjustment Act, designed to raise crop prices by controlling production, was first declared unconstitutional. It subsequently led to the present system of agricultural subsidies that have been abused by large agricultural interests.

But the New Deal's public works programs were undeniably bold. Their legacy exists today in the Great Smoky Mountains National Park and the Golden Gate Bridge, in more responsible farming techniques promoted by the newly formed Soil Conservation Service, in more than a thousand new schools, in rural electrification and, closer to home, in Genevieve Chandler's wonderful chronicles of the lives of black Lowcountry residents.

We are confronted with the prospect of Congress committing $850 billion in federal support in early 2009. We should do more than "stimulate" the economy. We should take the opportunity to envision the kind of communities and the kind of country we need 50 to 100 years from now and make the investments necessary to begin that transformation.

To start with, we need to replace the growth model that yields 10 car trips per day for every house and turns parents into chauffeurs, employees into commuters and interstate highways into parking lots. South Carolinians should have the choice to take a train or a bus to go about their daily lives. And, as the third least-healthy state in the nation, we desperately need more opportunities to walk and bike to work.

The U.S. Conference of Mayors stimulus request includes the city of Charleston's proposal to acquire the right of way and begin the work on a commuter rail line between Summerville and Charleston. The city is also seeking funding for bike and pedestrian projects, including a much needed walk and bicycle way along the Ashley River bridge.

Without a new approach to energy, no amount of federal stimulation will allow us to avoid the linked disasters of economic decline, increasing vulnerability to international unrest and escalating levels of pollution. Since buildings account for almost half of all of the energy used in America, energy efficiency is the single most important initiative we could undertake. Here, too, South Carolina has a particularly important responsibility. We are the fourth least efficient state in the nation, so energy efficiency will not only advance national goals, it will make us a more competitive state.

Many of the projects in the U.S. Conference of Mayors report involve building improvements, including eight from Charleston. Taking a lesson from the Soil Conservation Service, it is essential that these projects be used as demonstration projects that stimulate similar investment in the private sector, where the majority of buildings in the country reside.

Improving education is, of course, essential to a sound future. Investments here - repairing and improving buildings, providing better equipment for classrooms and lowering operating costs through efficiency - will yield results for decades. The mayors' report identifies $5 billion in school investments, including more than a quarter billion dollars for Charleston.

Land, transportation, energy and education are the opportunities and the challenges of the future. It has never been more important that we address these with insight, persistence and bold vision.

The next few months will reveal whether we still have the capacity as a country to undertake the ambitious transformation required for a secure and prosperous future or whether we will be condemned to replay the mistakes of the past 30 years.