Sydney M. Williams
Thought of the Day
January 7, 2010
I recall a quarter century ago when Henry Kaufman, Salomon’s chief economist and head of research, said that he wished he saw more analysts deep in thought rather than crunched over their terminals preparing spread sheets. One has the same wish today about that great deliberative body – the United States Congress.
In a recent article in National Affairs, Jim Manzi (former CEO of Lotus Development) discusses competing forces that are challenging America today: the need to compete in a globalized world and the importance of maintaining our historical position as a compassionate people. Up to now we have been successful, in a competitive stance, in that over the last thirty years our share of global output, despite the rise of China, has remained constant at 21%. Western Europe, in contrast, has seen its share collapse from 40% to 25%. To stay competitive requires an innovative spirit encouraged by limited regulation and few restrictions on behavior. The problem, though, is that that growth has come at the cost of a less cohesive society – a society marked by a growing disparity between rich and poor, educated and uneducated; a society in which it has become increasingly difficult to mount the ladder of success. History suggests that such disparities, if ignored, ultimately end in tyranny or revolution – not a course most of us would choose.
The great challenge for America, as Mr. Manzi writes, is to reconcile these competing forces and, I would add, in such a manner that raises the median, not the average. This is where Dr. Kaufman’s comment seems relevant. Jim Manzi suggests four steps that could be taken. Simplified, they are: one, unwind last year’s partnerships between Big Government and Big Business. Government is too inflexible to compete in our global environment; two, implement financial reform aimed at avoiding systemic risk without stymying innovation; three, deregulate public schools – let charter schools bloom and allow money to follow the students (rather than the other way around), and four, “re-conceptualize” immigration by recruiting talent wherever it may be, “from Mexico City to Beijing to Helsinki to Calcutta.” While I agree with all four proposals, the last two have particular appeal.
Proposals of this sort – out of the box thinking – deserve careful and thoughtful consideration and debate. Congressional members should set aside their fractious differences and in a harmonious spirit try to resolve this Sisyphean problem – let members come together, heeding Dr. Kaufman’s wish, and think seriously of these issues.
President Obama, addressing one side of the conflict, has seemingly set us on a course toward European socialism. Such a path will require higher taxes and will likely result in a depreciated currency. It will dull our native instinctual spirit of innovation and creativity. His policies may flatten the differences between rich and poor, but they will ultimately lower the standard of living for everyone.
Too many people, especially the unions, are mired in a past that will not return. No man is an island, wrote John Donne 400 years ago, and certainly no country can afford to be. We live in a world in which competition is intensifying – for customers, for goods, for immigrants and for services. To survive and flourish in the decades ahead, we must recognize and meet our competition.