Most of you know that I get a lot of comments and emails about this blog. We're up to around 150-200 regular readers now and, boy oh boy, do every single one of them want to give yours truly a piece of their mind.
I've gotten some interesting ones over the years but the ones that I look forward to the most are the ones that illuminate and challenge my thoughts. Out of these and once in a great while, I get a game changer.
When President Obama makes his state of the union address in a few short weeks, I hope he takes Jim Manzi's Keeping American's Edge in mind. In fact, I hope he studies it thoroughly and puts Manzi on his staff. This link was direct to me by juris imprudent, a regular poster here and on Kevin Baker's blog, The Smallest Minority. I want to start off by thanking juris for pointing me in Manzi's direction. I not only found it interesting, as juris did, but thought it to the most significant summation of the United States in the 21st Century I have seen thus far. It has changed the way I view our country. Better still it has organized several ideas in my head in such an order that my principle goal in nearly everything in life has been achieved-greater width of vision.
I am going to spend the next several days discussing this article. I may come back to it periodically over the next few weeks. Go and read it. And then read it again. It's that fucking good.
Let's begin with what Manzi (and I) think should be our chief goal.
Beyond our short-term worries, and behind many of today's political debates, lurks the deeper challenge of coming to terms with America's place in the global economic order.
This is at the crux of everything we argue about in this country. First of all, there are many people who don't want us to become part of any global economic order. Those people, simply put, are not living in reality. The world has shrunk to the point of where any talk of isolationism is ludicrous. The real challenge is to pinpoint where we fit and how can better succeed in that role while maintaining and propagating our core value of freedom.
Now, the problem.
Our strategic situation is shaped by three inescapable realities. First is the inherent conflict between the creative destruction involved in free-market capitalism and the innate human propensity to avoid risk and change. Second is ever-increasing international competition. And third is the growing disparity in behavioral norms and social conditions between the upper and lower income strata of American society.
It doesn't get any starker than that. So the question becomes, as Manzi puts it, how do we "balance economic dynamism and growth against the unity and stability of our society?" In all honesty, I think we've done a poor job at it. We have not figured out a way to balance the stewardship of government with the freedom that the market place provides. Because of this inability to find this balance, we have suffered on both and international and national level.
Indeed, as Manzi continues...
After all, we must have continuous, rapid technological and business-model innovation to grow our economy fast enough to avoid losing power to those who do not share America's values — and this innovation requires increasingly deregulated markets and fewer restrictions on behavior. But such deregulation would cause significant displacement and disruption that could seriously undermine America's social cohesion — which is not only essential to a decent and just society, but also to producing the kind of skilled and responsible citizens that free markets ultimately require.
Who are we losing power to right now? China. As I have stated previously, China is all in with green technology. Right now, we are mostly even with them. If we continue to let the climate change issue become more polarized, we stand to lose an enormous amount of economic standing in the international marketplace. As Manzi has noted, we will cede power to those who do not share our values.
And Manzi is correct in stating that deregulation and fewer restriction on behavior is what is needed for true innovation. The monkey in the wrench, though, is that this type of deregulation leaves behind a large portion of our population. Without the government there to police "just" hiring practices and progressive taxation distribution, the private sector will descend into amorality and we will lose social cohesion. We have started to see signs of this already.
Why has this problem arouse and become so difficult to reconcile? I'll be looking at that tomorrow.
9 comments:
The public sector will descend into amorality without appropriate government control, eh? And what mechanism prevents government descent into amorality, other than the Constitution, which is continually disregarded, belittled and shat upon by your so- called "right people"?
Please show me examples where a flat tax system and a free market has destroyed social cohesion. I can't wait.
Well, it's coming up later in the article.
I'm curious, though, what you consider to be appropriate government control. Define exactly how the government should be involved in the free market. More specifically, did the barriers shed by Graham Leach Bliley lead to a break down in social cohesion?
Only if you believe that single act was the reason for the subprime mortgage crisis. Fanny and Freddie did no wrong at all, right? After all, those are government institutions, and we all know how infallible they are.
Government in my opinion should have little to no control over the market at all. Take off the chains and watch the economy. Just try it one time - just once. If it fails, if our country descends into amorality, Congress can slap the cuffs back on and I'll admit I was wrong. Just try it.
Let's see if the gov will willingly relinquish control to raise tax receipts and get the country back on track. Not going to hold my breath.
No institution is free from guilt in the mortgage meltdown. But, when you boil it all down, the same pressures were put on corporate, government and quasi-governmental institutions. That is, maximizing profit in the short term in order to give executives immediate personal gain at the expense of the organization's long-term viability.
The libertarian idea that if you just take the shackles off free enterprise they will become golden-egg-laying geese is a delusion. They will maximize their own profits at the expense of others. They will form monopolies, dump coal sludge in holding ponds that leach into rivers and aquifers, use lead in paint on toys, skimp on aircraft maintenance, neglect cleaning their peanut processing machinery, etc.
The theory is that no business would do anything wrong because it would lose them customers is quaint. As we've seen over and over, execs are willing to risk jail time to earn a few extra bucks. If we remove all those regulations and laws, what would be the expected outcome? Conservatives are always telling us that the death penalty as a deterrent for murder. Wouldn't logic also dictate that we need regulation as a deterrent for bad business practices?
I just heard about an interesting new tack the drug companies have taken. When drugs go off patent, companies that make generic drugs start producing them, which often drives the price down to pennies a pill because most drugs aren't all that expensive to produce. To prevent this the patent holders simply pay the generic manufacturers a fee for not producing the drugs.
Somehow this is not illegal. Somehow it's not price fixing, or bribery, or monopolistic behavior. It's innovation like this that really restores my faith in the free enterprise system.
I'd be willing to give it a go, Kevin. If I were in charge, I'd take off the chains for awhile to see what would happen.
As Manzi says, we overregulate where we shouldn't and underregulate where we shouldn't...which is what led to the mortgage mess.
But, when you boil it all down, the same pressures were put on corporate, government and quasi-governmental institutions.
No, blk, the governmental institutions were driven by the political agenda (quite bi-partisan too) that home ownership is a key part of the American dream. How that dovetailed with banking and real estate development interests is not simply a tale of greed, though I understand why certain moralizers might wish that to be so.
If ones goal is cheaper drugs and more regulation, there is another way. Here's how it works right now - Buttercup Pharmaceuticals spend $1 billion bringing a new drug to market. A single dose of this drug costs five cents to manufacture. Buttercup Pharma prices a dose at $1 in the US market and hopes to sell enough to recover its $1 billion investment, cover some of the research costs of the many drugs that don't make it to market, and also make a profit.
Other countries who don't have a free enterprise system and usually some form of socialized medicine, approach Buttercup Pharma and offer to buy the drug for 20 cents a dose. Buttercup sees that if it accepts, it will make 15 cents a dose on these additional sales. If it declines, it will make nothing, so Buttercup accepts.
Perhaps you should consider legislation that requires drug companies to sell their products in the US at a price that is no higher than in any other country. The result might be that because of the higher volume, Buttercup sells the drug to all comers at 50 cents a dose. This would cut the U.S. price in half, saving US consumers tens of billions of dollars while giving other countries the opportunity to contribute to the research they have been freeloading on for so many years. The other countries would scream a bit but they don't vote.
Blk - your "delusion" comment is unsupported because it's never been tried. Not once. Ever. This is a TESTABLE hypothesis - we don't need to rely on your predictions. It'll never be tried though, because despite your doom and gloom crystal ball scenario, you and your fellows on the left have just enough of an inkling of uncertainty that it MIGHT work - and the result of that is more terrifying for the left. I don't know if it will work - I think it will - but I'd at least like to give it just one shot.
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