Today's economic crisis must not overshadow long-term problems

In the shadow of the euro crisis and America's fiscal woes, it is easy to ignore the global economy's long-term problems. But, while we focus on immediate concerns, they continue to fester, and we overlook them at our peril.

The most serious is global warming. Some suggest that, given the economic slowdown, we should put global warming on the backburner. On the contrary, retrofitting the global economy for climate change would help restore aggregate demand and growth.

At the same time, the pace of technological progress and globalisation necessitates rapid structural changes in both developed and developing countries. Such changes can be traumatic, and markets often do not handle them well.

Today's problems arise partly from the need to move from manufacturing to services. New firms must be created, and modern financial markets are better at speculation and exploitation than they are at providing funds for new enterprises.

Moreover, making the transition requires investments in human capital that individuals often cannot afford. Among the services that people want are health and education, two sectors in which government naturally plays an important role.

Before the 2008 crisis, there was much talk of global imbalances, and the need for the trade-surplus countries, like Germany and China, to increase their consumption. That issue has not gone away.