That stream of basic discoveries was produced not mainly by self-funded geniuses in backyard garages but rather by a quite unusual and focused machine for discovery and innovation — a network of institutions deliberately founded, organized, and run for the purpose of fueling scientific and technological insight. Including such legendary institutions as Bell Labs, Xerox PARC, RCA Laboratories, DARPA, and others, this network consisted of public, private, nonprofit, and for-profit efforts working in combination. Programs with clear commercial potential were supported alongside efforts at “pure science,” with the two streams resonating with and feeding off each other. This discovery and innovation machine existed because of a business and political culture that supported invention independent of immediate practical applications, as being “good for the country.”

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Some observers considered the juxtaposition a howling blunder; others regarded the move as a calculated insult from a rising superpower to an empire in decline. But whatever the real story, of one thing there could be no doubt: In the same year that the United States retreated from space, shutting down its Space Shuttle program, China declared that the sky would be no limit to its own ambitions.

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Pan your camera from one coast to the other, from city to suburb to farm and back again, and you'll witness scenes like these. They are the legacy of the Great Recession, the Lesser Depression, or whatever you choose to call it.

In recent months, a blizzard of new data, the hardest of hard numbers, has laid bare the dilapidated condition of the American economy, and particularly of the once-mighty American middle class. Each report sparks a flurry of news stories and pundit chatter, but never much reflection on what it all means now that we have just enough distance to look back on the first decade of the twenty-first century and see how Americans fared in that turbulent period.

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The Fortune piece went on to describe other properties the Chinese were snapping up. Just the previous month the China Investment Corporation, the government's sovereign wealth fund, had spent a billion dollars on a minority stake in a Kazakhstan oil and gas company. About the same time the CIC paid $850 million for part of a Hong Kong trading firm. The China Development Bank floated Brazil a $10 billion loan to underwrite exploration off the South American coast. "So far this decade," the Fortune correspondent recounted breathlessly, "China has spent an estimated $115 billion on foreign acquisitions. Now that the nation is sitting on massive foreign-exchange wealth ($2.1 trillion and counting), it is eager to find something (anything!) to invest in besides U.S. Treasury debt."

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But why exactly should America be so concerned? Yes, we export to Europe – but those exports aren't going to dry up. And in any event, they're tiny compared to the size of the U.S. economy.

If you want the real reason, follow the money. A Greek (or Irish or Spanish or Italian or Portugese) default would have roughly the same effect on our financial system as the implosion of Lehman Brothers in 2008.

Financial chaos.

Investors are already getting the scent. Stocks slumped to 13-month low on Monday as investors dumped Wall Street bank shares.

The Street has lent only about $7 billion to Greece, as of the end of last year, according to the Bank for International Settlements. That's no big deal.

But a default by Greece or any other of Europe's debt-burdened nations could easily pummel German and French banks, which have lent Greece (and the other wobbly European countries) far more.

That's where Wall Street comes in. Big Wall Street banks have lent German and French banks a bundle.

The Street's total exposure to the euro zone totals about $2.7 trillion. Its exposure to to France and Germany accounts for nearly half the total.

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This is silly. The movement's "demand" is economic justice. Its goal is plainly to remind everyone that the bloated, obscenely profitable financial industry is sitting on vast piles of money while everyone else struggles, and to focus outrage about that situation where it belongs. Groups aligned either directly or in spirit with Occupy Wall Street have spent years issuing tons of demands (a financial transaction tax!) that the elites dismiss as unreasonable and the objective press ignores as unrealistic.

Some people have tried to step back from those demands already made and coded as "liberal" in order to find some sort of great middle ground. Matt Langer proposed two simple demands that focus on "process," and not "politics": Publicly financed elections and the elimination of paid lobbying. Noble causes, but only indirectly related to the economic injustices being highlighted and protested. (And "paid lobbying" means not just big money industry groups, but also labor, environmental and civil rights groups, and low-income advocacy organizations.)

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In the last few years, however, the term has broken loose from its moorings, and "corporatism" now seems to have become an elastic, pejorative phrase for any dealings between government and business of any kind, other than arm's-length regulation. A number of conflicting and not necessarily related things are lumped under the ever-more-inclusive term "corporatism"-- everything from public venture capital for emerging technologies to the outsourcing of government functions to for-profit contractors to political contributions by companies and lobbies. A word that once had a narrow and fixed meaning is in danger of becoming an empty, all-purpose insult, like the epithets of "fascism" and "socialism" hurled by conservatives at anyone who disagrees with them.

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And not just any cars either. Big steel is back in fashion. Sales of GM's Chevy Silverado pickup truck jumped 35 percent.

The auto industry's showing was its best since April -- before Japan's earthquake/tsunami catastrophe sent shock waves through the global auto manufacturing supply chain. That's a point worth paying special attention to. Throughout the first half of 2011, Federal Reserve Chairman Ben Bernanke insisted that signs of slowing growth in the economy were due to "temporary" factors like the Japan quake, and growth would accelerate in the second half of the year.

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On Wednesday, surprisingly good numbers on durable goods spending encouraged both JP Morgan and Macroeconomic Advisers to upgrade their predictions of GDP growth for the current (third) quarter. Then, on Thursday, the Bureau of Economic Analysis announced that its final estimate for second quarter economic growth came in at 1.3 percent, or .3 percent higher than its last guess, while the Department of Labor reported that weekly jobless claims dropped sharply -- to their lowest level since April.

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Whoever the eventual Republican nominee proves to be will recycle the claims of Ronald Reagan in 1984 that the formula for prosperity is more tax cuts for the rich and corporations. Meanwhile, Barack Obama combines the emphasis on deficit reduction of Walter Mondale in 1984 with the claim to cool technocratic expertise of Michael Dukakis in 1988.

Meanwhile, most of the "bold new ideas" put forth by pundits and policy wonks are actually the stale ideas of a generation ago. No doubt there are fresh waves of college students who, for example, find the idea of improving our educational system by means of charter schools and national testing unfamiliar and provocative. But those of us over 30 remember that the bold new ideas about school reform were also the bold new ideas of 2001 and 1991 and 1981.

If you went to sleep in the Carter years and woke up in the Obama years, you’d find many of the same people making the same argument about solar and wind power, which somehow are always only 30 years away from providing a major chunk of the nation’s energy. In the words of Yogi Berra, it’s déjà vu all over again.

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This scene came back to me earlier this month when my reflections on long-term unemployment began flying around the Internet, shared by friends on Facebook and Twitter, and then by friends of friends. In Salon, the piece carried the headline "Even Harvard Couldn't Protect Me," but in my mind I retitled it "The Essay Wherein I Out Myself as Being Unemployed." Since my last job ended, I'd grown accustomed to describing myself as a freelancer, which was true, but just not the whole truth. While I was indeed doing writing for hire, including some very cool projects -- a speech for a Harvard dean, essays for Salon -- the fact is these assignments didn't come close to covering my expenses.

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No wonder Jim O'Neill, who coined the neologism BRIC and is now chairman of Goldman Sachs Asset Management, has been stressing that "the world is no longer dependent on the leadership of the U.S. and Europe." After all, since 2007, China's economy has grown by 45 percent, the American economy by less than 1 percent -- figures startling enough to make anyone take back their predictions. American anxiety and puzzlement reached new heights when the latest International Monetary Fund projections indicated that, at least by certain measurements, the Chinese economy would overtake the U.S. by 2016. (Until recently, Goldman Sachs was pointing towards 2050 for that first-place exchange.)

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Granholm and I are sitting in a corner office of a building on the University of California at Berkeley campus, where Granholm is spending a year of "sabbatical." She leans over her desk, looks me in the eye, and demonstrates how the the Chinese official rubbed his hands together like a kid unable to contain his glee right before unwrapping Christmas presents. "'Take your time,' he tells me," says Granholm. "'Take your time.'"

She shakes her head as if in disbelief at how short-sighted the American political establishment has become. Her point is obvious, and oft-repeated during the course of our interview: In a globalized world, the U.S. economy will not thrive unless we get serious about targeting strategically important sectors of the economy. The rest of the world is playing the economic development game for keeps, while the U.S. seems willing to abandon the board all together.

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But a look inside the numbers, at the five worst and five best states, is unhappily revealing. The states with the five highest unemployment rates are Nevada (13.4 percent), California (12.1 percent), Michigan (11.2 percent), South Carolina (11.1 percent) and Florida (10.7 percent.) Nevada, California, Michigan and South Carolina all registered unemployment increases in August, compared to July. Florida held even.

The states with the lowest unemployment rates are North Dakota (3.5 percent), Nebraska (4.2 percent), South Dakota (4.7 percent), New Hampshire (5.3 percent) and Oklahoma (5.6 percent.)

The combined population of the five worst states: 73,864,261.

The combined population of the five best states: 8,380,933.

The unavoidable conclusion: Unemployment is bad and getting worse in some of the most highly populated regions of the United States.

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America's rise to economic and military supremacy was fueled in no small measure by its control over the world's supply of oil. Oil powered the country's first giant corporations, ensured success in World War II, and underlay the great economic boom of the postwar period. Even in an era of nuclear weapons, it was the global deployment of oil-powered ships, helicopters, planes, tanks, and missiles that sustained America's superpower status during and after the Cold War. It should come as no surprise, then, that the country's current economic and military decline coincides with the relative decline of oil as a major source of energy.

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States don't have their own monetary policies so they can't lower interest rates to spur job growth. They can't spur demand through fiscal policies because state budgets are small, and 49 out of 50 are barred by their constitutions from running deficits.

States can cut corporate taxes and regulations, and dole out corporate welfare, in efforts to improve the states' "business climate." But studies show these strategies have little or no effect on where companies locate. Location decisions are driven by much larger factors -- where customers are, transportation links, and energy costs.

If governors try hard enough, though, they can create lots of lousy jobs. They can drive out unions, attract low-wage immigrants, and turn a blind eye to businesses that fail to protect worker health and safety.

Rick Perry seems to have done exactly this. While Texas leads the nation in job growth, a majority of Texas's workforce is paid hourly wages rather than salaries. And the median hourly wage there was $11.20, compared to the national median of $12.50 an hour.

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The poverty rate in 2010 rose to an embarrassing 15.1 percent, up from 14.3 percent in 2009. "There were 46.2 million people in poverty in 2010, up from 43.6 million in 2009 -- the fourth consecutive annual increase and the largest number in the 52 years for which poverty estimates have been published," reported the Census Bureau.

The poverty threshold for a family of four in 2010 was $22,314. Overall, real median household income declined by 2.3 percent in 2010.

Put these numbers together with what we already know about how the rich are faring in the U.S. -- the top 10th of 1 percent takes home about 24 percent of all American wealth -- and we have stunning confirmation of what a Citigroup analyst has labeled the "consumer hourglass economy."  The wealthy are doing fine, while the number of those living in poverty grows, and the middle ... the middle is just disappearing.

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FDR's New Deal remains the standard by which all Democratic presidents are judged. The government put millions of Americans directly to work building roads and bridges and schools that still exist today. The creation of Social Security established the underpinnings of a safety net for all Americans. Wall Street's tendency to excess and destructive speculation was reined in by the Securities Exchange Act and the banking system stabilized for generations by federal deposit insurance.

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Second cheer: He laid out the problem correctly and effectively. He explained why jobs and growth must be the nation's first priority now -- not the federal deficit. The economy is in crisis. People are hurting. So government must act, and act quickly. It's irresponsible at a time like this to suggest that government should simply close down.

But a jeer because the jobs plan he presented isn't nearly large enough or bold enough to make a major dent in unemployment, or to restart the economy.

$450 billion sounds like a lot -- and is more than I expected -- but some of this merely extends current spending (unemployment benefits) and tax cuts (in Social Security taxes), so it doesn't add to aggregate demand.

The net new boost to the economy is closer to $300 billion. That doesn't approach even half the gap between what the economy is now producing and what it could produce at or near full employment.

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What are the most potent things President Obama could do to boost job creation?

No. 1, we need to extend unemployment insurance when it runs out at the end of this year. Not doing that would not just cut off desperate people; it would also be a really bad anti-stimulus for the economy. Unemployment insurance is very good economic stimulus. It gets spent right away and supports jobs throughout the economy.

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