Thomas Friedman: U.S. Also Needs Buildup

Many things make me weep about the current economic crisis, but none more than this brief economic history: In the 19th century, America had a railroad boom, bubble and bust. Some people made money; many lost money. But even when that bubble burst, it left America with an infrastructure of railroads that made transcontinental travel and shipping dramatically easier and cheaper.

The late 20th century saw an Internet boom, bubble and bust. Some people made money; many people lost money, but that dot-com bubble left us with an Internet highway system that helped Microsoft, IBM and Google to spearhead the information technology revolution.

The early 21st century saw a boom, bubble and now a bust around financial services. But I fear all it will leave behind are a bunch of empty Florida condos that never should have been built, used private jets that the wealthy can no longer afford, and dead derivative contracts that no one can understand.

Worse, we borrowed the money for this bubble from China, and now we have to pay it back -- with interest and without any lasting benefit.

Yes, this bailout is necessary. This is a credit crisis, and credit crises involve a breakdown in confidence that leads to no one lending to anyone. You don't fool around with a credit crisis. You have to overwhelm it with capital. Unfortunately, some people who don't deserve it will be rescued. But more important, those who had nothing to do with it will be spared devastation.

You have to save the system.

But that is not the point of this column. The point is, we don't just need a bailout. We need a buildup. We need to get back to making stuff based on real engineering, not just financial engineering. We need to get back to a world where people are able to realize the American dream -- a house with a yard -- because they have built something with their hands, not because they got a "liar loan" from an underregulated bank with no money down and nothing to pay for two years.

Our economy is like a car, K.R. Sridhar, the founder of Bloom Energy, told me. The financial institutions are the transmission system that keeps the wheels turning and the car moving forward. Real production of goods that create absolute value and jobs, though, are the engine.

"I cannot help but ponder about how quickly we are ready to act on fixing the transmission, by pumping in almost $1 trillion in a fortnight," Sridhar said. "On the other hand, the engine, which is slowly dying, is not even getting an oil change or a tuneup with the same urgency, let alone a trillion dollars to get ourselves a new engine. Just imagine what a trillion-dollar investment would return to the economy, including the 'transmission,' if we committed at that level to green jobs and technologies."

Indeed, when this bailout is over, we need the next president -- this one is wasted -- to launch an ET, energy technology, revolution with the same urgency as this bailout. Otherwise, all we will have done is bought ourselves a respite, but not a future. The exciting thing about the energy technology revolution is that it spans the whole economy -- from green-collar construction jobs to high-tech solar panel designing jobs. It could lift so many boats.

The Bush team says that if this bailout is done right, it should make the government money. Great. Let's hope so, and let's commit right now that any bailout profits will be invested in infrastructure -- smart transmission grids or mass transit -- for a green revolution.

Thomas Friedman is a columnist with the New York Times News Service and a best-selling author.