In recent months, the nation's collective consciousness has been focused nearly exclusively on the financial crisis fueled by the subprime mortgage debacle. It's easy to see why. Unlike some crises that seem to have little impact on our day-to-day lives, this one hits all Americans, even those least involved, close to home. While big business is taking its share of the heat, regular folks are also feeling the pain as the financial crisis affects their retirement benefits and jobs and their ability to finance homes, cars, and their children's educations and to start and maintain small businesses.
By now you've heard all of the pundits explain how such a thing could happen. How Congress's desire to expand home ownership resulted in too many bad loans. How interest rates stayed too low for too long. How levels of risk were underestimated or misunderstood. And, yes, how some took advantage of a bad situation and made it worse. The fact is, this current financial crisis arose from a classic bubble-albeit a large and troubling one-with many underlying causes. And like all bubbles, it eventually had to burst.
While the effect of the crisis will be measured in years, not months, steps have been taken to keep our economy from spiraling out of control. Congress acted swiftly, passing, with bipartisan support, the Emergency Economic Stabilization Act of 2008, and other measures are under consideration. Only time will tell if their actions were sufficient to the challenge of stabilizing our financial markets.
Like most of you, my attention has been riveted by these developments, and understandably so. But I also know that while these events have been unfolding, the world has not ground to a halt. The challenges that we were facing before the crisis have not gone away. And as compelling as the financial crisis is, we cannot allow it to distract us very long from the issues that continue to define US competitiveness in the 21st century.
Take healthcare, for instance. According to some studies, as a percentage of GDP, the US spends more on healthcare than any other nation. Rising healthcare costs directly affect our ability as US businesses to compete in a global economy.
The future of US competitiveness is also dependent on our willingness and ability to develop and implement a sound and sustainable energy policy. If we don't take control of our own energy destiny now, we'll face the costly consequences later.
Clearly, the world is changing, and we can't afford to be shortsighted. In addition to energy and healthcare, we are facing numerous other challenges that will test America's evolving role in the global economy. In addressing these challenges, US business and commercial policy cannot be set in isolation or marginalize the interests of the rest of the world. Doing so will ultimately harm US companies and consumers.
Is solving the current financial crisis tremendously important? Absolutely. Is it a challenge we should focus on to the exclusion of all others? Definitely not. Over the years, we and our clients have been through a number of financial emergencies, and that experience has taught me a lesson: It's tempting to be consumed by the crisis at hand. But doing so rarely solves the problem, often paves the way for other problems equally as serious, and could place US business in a precarious position.
While no one can say for certain what the future holds, my best thinking is this: Only by bringing experience, judgment, context, and perspective to all of the challenges we face can we position US business to succeed in the 21st century.
As President John F. Kennedy once said, "Written in Chinese, the word 'crisis' is composed of two characters-one represents danger, and one represents opportunity." The dangers of the current crisis are clear, but so is the opportunity. In facing those dangers, we just might discover how US business must evolve to compete. In applying that knowledge, we might also prevent the next major crisis from happening.
And that's my view.
Dennis Nally is chairman and senior partner of PwC.