The U.S. Economy's 'You First' Problem

In 1901, William Randolph Hearst's launched a cartoon featuring two overly polite friends named Alphonse and Gaston. Each insisted with conspicuous courtesy that the other go first. Amid elaborate bowing, scraping, and après-vous-ing, Alphonse and Gaston never managed to make it through an open doorway.

Now, 110 years later, economists have a name for the Alphonse and Gaston routine that's hobbling the U.S. economy: "coordination failure." Companies won't hire because customers won't spend. Customers won't spend because companies won't hire. This stare-down has been going on since approximately December 2007, when the worst slump since the Great Depression took hold. Many Americans would like someone to make a move so they can get back to prosperity. Yet they've lost confidence in the actions that were designed to build confidence and restore growth—namely, near-zero overnight interest rates, the bailout of the financial system, a weakening dollar, and stimulus measures that add to the federal budget deficit and the national debt.