Sunday, July 22, 2012

Twilight of the Meritocracy (I)

In his important book Coming Apart: The State of White America, 1960-2010, conservative Charles Murray does two things liberals detest. First, he documents how the great middle of America, those who haven’t graduated from college, are falling behind in spite of government programs. And second, Murray ties the growing upper-lower gap not to big government’s failure to engineer equality, but rather to our national elite’s failure to provide moral leadership.

Liberals don’t want to hear that meritocracy is creating a semi-permanent underclass. Even more, they reject attempts to connect moral decline to their leadership. (We’ve covered Murray’s book here, here, here, here, here, and elsewhere.)

That’s why last Sunday’s front page New York Times story is so important. In a long article, reporter Jason Deparle confronted the very issues Murray raised in his book. Deparle wrote:
41% of births in the United States occur outside marriage, up sharply from 17% three decades ago. But equally sharp are the educational divides. . . Less than 10% of the births to college-educated women occur outside marriage, while for women with high school degrees or less the figure is nearly 60%. Long concentrated among minorities, motherhood outside marriage now varies by class about as much as it does by race.
“The people with more education tend to have stable family structures with committed, involved fathers,” said [Sarah McLanahan, a Princeton sociologist]. “The people with less education are more likely to have complex, unstable situations involving men who come and go.” . . marriage also shapes the story in complex ways.
These are Murray’s findings exactly. Deperle connected economic problems and marital decline because poorer women see fewer “marriageable men,” so end up struggling alone. He quotes Harvard sociologist Christopher Janks: “The people who need to stick together for economic reasons don’t, and the [wealthy] people who least need to stick together do.” In fact Robert Lerman of the Urban Institute ties 40% of inequality’s growing gap between lower-middle- and upper-middle-income to single parenthood.

Another study of 2,000 mothers in their mid- to late 20s found that a third with high school degrees or less already had children with multiple men, along with 12% of mothers with post-high-school training. But none of the women who finished college before giving birth had had children with more than one man.

Brookings Institution’s Scott Winship looked at class movement by 2,400 Americans now in their mid-20s. Of those in the poorest third as teenagers, 58% with two parents moved to a higher level as adults, while only 44% of those with an absent parent did. At the top, just 15% of teenagers living with two parents fell to the bottom third, but 27% of teenagers with one parent dropped to the bottom.

Deparle’s findings about the sharply rising and negative consequences of single motherhood are so similar to Murray’s that the liberal New York Timesman was forced to acknowledge the existence of Murray’s book. But Deparle did so only in a sentence bordered by parentheses, in which he said that Murray “attributed the decline of marriage to the erosion of values, rather than the decline of economic opportunity.”

That drew a sharp rebuke from Thomas Sowell of Stanford’s Hoover Institution:
[Deparle’s] outcome differences are called "class" differences. . . when two white women, who came from families in very similar social and economic circumstances, made different decisions and got different results . . . Personal responsibility, whether for achievement or failure, is a threat to the whole vision of the left, and a threat the left goes all-out to combat, using rhetoric uninhibited by reality.  [emphasis added]
The meritocracy may read Murray, but seemingly still cannot grasp how government programs eat away at personal responsibility rather than nurture it.  It's a fact that the 48 years since liberals launched the war on poverty are the very 48 years single motherhood has exploded. It’s time for the meritocracy, hardworking and to be found nurturing children in two-parent families, to advocate on behalf of personal responsibility at all economic levels.  As Murray says, it's time for the upper class to preach “what it practices.”

If not, then the current elite should allow power to pass from their hands.  They should allow others to try personal responsibility based on competition and freedom of choice.

Monday, July 16, 2012

“It takes a government to raise a business.”

“look, if you’ve been successful, you didn’t get there on your own. . . If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges.  
"If you’ve got a business -- you didn’t build that. Somebody else made that happen. The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet. . . when we succeed, we succeed because . . . we do things together.” [emphasis added]

 --Barack Obama (video transcript)

So there you have it. Obama leads the side of our divided nation that values pie cutters over pie growers. And he doesn’t hide his views. Faced with an overwhelming economic crisis, Obama, Democrats, liberals would rather recut than resize. After all, the wealth you earned belongs to the collective that made your wealth possible. Égalité. “Positive liberty.”  

“You forget that the fruits belong to all and that the land belongs to no one.”

--Jean-Jacques Rousseau


Primitive communism has its place in the modern world, as we have seen. Just look at the family. But from the Paris Commune to Maoist China to Pol Pot’s Cambodia, we’ve found primitive communism doesn’t work in larger society.

Still, never mind Obama’s reference to “doing things together.” Liberals of course reject communism in favor of democratic socialism as currently practiced in Europe. It’s not a communal state, it’s big government running the system, preaching equality, but practicing—as all states do—kleptocracy.

Listen to Josef Joffe, editor and publisher of Germany’s most respected journal, Die Zeit. Joffe has his nose right up against German democratic socialism. And Joffe says:
The central problem . . . of the liberal-left intelligentsia [is] the “Doctor State Syndrome.” The individual is greedy, misguided or blind. The state is the Hegelian embodiment of the right and the good that floats above the fray. But the state does not. It is a party to the conflict over “who gets what, when and how”. . . It makes its own pitch for power; it creates privileges, franchises and clienteles. This is why it is so hard to rein in, let alone cut back. The modern welfare state creates a new vested interest with each new entitlement. It corrupts as it does good.
The wages of sin [to the social-democrats] are the loss of community, trust, equality and social justice. And the true god…is European-style social democracy à la Scandinavia. [Yet in reality,] the market is the best information system known to man: it has millions broadcasting in real time what is offered and what is wanted at what price. [emphasis added]
To the other side—to conservatives—the answer is freedom (“liberty”), not equality. It’s “negative liberty,” not “positive liberty.” It’s growth, not redistribution. Liberal failure from 2007 (when Democrats gained control of Congress) to the present should have made it manifestly clear that big government liberalism no longer works. Hope and change lie with people free to follow their individual dreams, to fail, to succeed.

Yet conservatives are sobered by evidence that 45% of Americans don’t have full-time jobs, 50% don’t pay federal income tax, and 70% get more from the federal government than they put in. Too many people may now be victims feeling entitled to the wealth of others, and thus focused on recutting rather than enlarging the pie.

Here’s Tom Keane, writing in the Boston Globe:
[A] national survey. . . asked what respondents thought were the most important elements of the American Dream. Where once economic success and upward mobility would have ranked high, they ranked last in the poll. Respondents said they increasingly valued things such as good marriages (83%) and “a long and healthy retirement” (77%). . . we just want to be happy.
And what’s wrong with that, you may ask? Nothing, really. . . very European. . . out of the rat race and focus[ed] on being content. But, to be blunt, America historically never was about being happy. For us, it’s been “the pursuit of happiness,” a phrase that is all about striving, not attaining. The American Dream required ambition and taking risks; it was about fame, fortune, and making things better for the next generation.
Keane has sympathy for those giving up, noting the Great Recession cost people “vast amounts of wealth . . . including homes and retirement accounts.”

Help needed, yes. But why a “handout,” not a “hand up”?

The “hope and change” answer should be “Jobs.”

Friday, July 13, 2012

Liberals agonize over meritocracy’s losers.

Maura Kelly has written for several liberal publications. She now has an Atlantic article entitled, “Trickle-Down Distress: How America's Broken Meritocracy Drives Our National Anxiety Epidemic.”

The article suggests that people are anxious because the meritocracy 1) works imperfectly (duh!), but 2) “people” (the educated national elite, that is) nevertheless believe in the system, so turn themselves into wreaks when they don’t perfectly succeed.

Kelly finds that the meritocracy’s less successful aren’t just the masses down below, but also insiders who simply don’t compete quite as well. She seems, in fact, to identify with anxious losers, wondering out loud if there really is any “meritocracy” at all:
Should we be thinking about ways to make America more of meritocracy in the hopes of quelling our stress? Says [Stephen] McNamee [of The Meritocracy Myth (2004)]: "A pure meritocracy is not possible and may not even be desirable." Far more important, he argues, is debunking the myth of meritocracy, harmful "because it provides an incomplete explanation for success and failure, often mistakenly exalting the rich and condemning the poor."
Indeed. As Alain de Botton noted in his engaging book Status Anxiety, there's a much darker side to the meritocracy story. "If the successful merited their success, it necessarily followed that the failures had to merit their failure," he writes. "Low status came to seem not merely regrettable but also deserved. ... To the injury of poverty, a meritocratic system now added the insult of shame."
We earlier digested a “Slate” article by liberal Jacob Weisberg conceding that when liberals act superior, they cut against the American ideal of social equality. Weisberg flatly identified America as “a meritocratic society,” and we appreciated his honesty at the time. After all, what else is our academically-credentialed elite but a “meritocracy”? Weisberg importantly noted what’s wrong with an elite based on academics—it brings “an even worse sting than under an aristocratic or hereditary one, because those who are less successful can't blame outcomes on the arbitrariness of the system.”

Weisberg seemed to relish the sting his words inflicted on losers; Kelly (along with those she quotes) is more worried about the pain losers suffer. Nevertheless, both view meritocracy’s downside as a lower class seemingly stuck where they belong.

Our own words anticipated the liberal angst found all over Kelly’s article about meritocracy’s permanent lower caste and what to do about it.  We wrote:
Is there guilt about standing for the oppressed, but living as an elite atop an anti-democratic (it’s based on merit) pyramid? I suspect a great deal, and see it displayed in . . . efforts to reassure each other that the right people are running the show. I see it in deceptive efforts to keep victims tied to the liberal elite—branding the “tea party” racist, going after governors trying to enforce Federal law requiring deportation of lawbreakers, uniting women against the Catholic church and Catholic Rick Santorum, demanding higher taxes of the rich when such taxes cannot close the deficit, claiming efforts to save Medicare are attempts to destroy it instead.
The liberal focus has to stay on the conservative enemy. Otherwise, the meritocracy may be forced to address the disturbing question of how can a democracy where the people rule also be a hierarchy that permanently consigns a majority to society’s lower rungs, based upon inherited intelligence? “Care for victims” may not be enough. It may not work.

Wednesday, July 11, 2012

Hope and Change: Healthcare

"There is a huge tension between the personalize-your-own-world ethos of the iPod/Facebook generation and the command-and-control, mid-20th-century welfare state programs of the Obama Democrats. . . Obama's policies. . . treat individuals as just one cog in a very large machine, designed by supposed experts who don't seem to know what they're doing. . ."

--Michael Barone, “RealClearPolitics”  

"those actually making that history—the people formerly known as the audience in critic Jay Rosen’s apt phrase—are treating their legacy interpreters not with kindness but contempt."

--Matt Welch, Reason

To paraphrase Martin Luther King, Jr., “the arc of history is long but it bends toward popular rule.” People power. Government down, individual rule up.

As we learned earlier, education and healthcare have much in common—they are regulated, public, in a down economy significantly adding jobs, and. . . their productivity growth rates have hit bottom, in fact they have turned negative.

School choice will bring us education hope and change.

In healthcare, the goal is to control costs without undermining quality.

Conservative Yuval Levin, in National Review, sums up very well healthcare’s current failings, all of which Obamacare threatens to compound:
the incentives in our health-care system are all screwed up precisely because of government policies and programs. Medicare, the biggest player in our insurance system by far, is an arcane fee-for-service system that encourages volume over value and inflates (while shifting) costs. Medicaid, meanwhile, has a state-federal structure that makes cost-containment nearly impossible (by having state policymakers make spending decisions while the Feds pay at least half the cost in an open-ended way). And the tax exclusion for employer-provided coverage creates a huge incentive for high-premium insurance while shielding everyone involved from actual prices and costs. All the incentives point to cost inflation and away from outcome-based health economics, so we shouldn’t be surprised to have an inefficient system.
Thankfully, Levin also prescribes a remedy--a people’s “hope and change” path to better healthcare:
Paul Ryan’s alternative to Obamacare. . .proposes an enormous expansion of coverage. . . it would transform today’s tax exclusion for employer-provided coverage into a capped universal health-care tax credit, which people could use to buy coverage or care regardless of their circumstances. . . Over time the effect would likely be even greater than [Obamacare's 21 million gaining coverage] since this system would create an enormous incentive for insurers to offer attractive low-premium plans that could be purchased for the amount made available by the [new tax] credit (simply put, neither consumers nor insurers would leave billions of dollars on the table unclaimed, and the enormous competition among insurers for that money would yield appealing options). So [the healthcare choice plan] would . . . get us closer to universal access to health insurance than Obamacare—and without the kinds of violations of individual liberty, the Constitution, and the laws of economics involved with Obamacare.
Hope and Change in healthcare comes from individual choice.

Monday, July 09, 2012

Hope and Change: Education

“Democrats aren’t just the party of government; they are the party of inefficient, expensive, unresponsive, bureaucratic government. They are the party of government workers first and foremost, and if there is a clash between the interests of the providers of government services and their consumers (between, for example, unqualified, unmotivated life-tenured public school teachers and kids), [they] protect[] workers first, others second. . . they are the party of the bitter clingers.”

--Walter Russell Mead, American Interest

Andrew J. Rotherham is an educational specialist and former Clinton White House domestic policy advisor who regularly blogs at “” After putting down a recent New York Times article on “No Child Left Behind” waivers that maintained the program “has been derided for what some regard as an obsessive focus on test results, which has led to some notorious cheating scandals”—a line Rotherham asserts is no more factual than “everybody knows” (cheating hardly began with the program, he points out), Rotherham gets down to basics:
When have we ever had a widespread increase in accountability in education without it being a three-ring circus, policymakers walking back from the brink, and a general bemoaning of things? . . .the real problem here is that our political system really doesn’t have the tensile strength [the balls?] to sustain a push for accountability over time. . .
None of the people cheering or jeering [the New York Times] article would put up for a moment with having their own kids in schools that couldn’t generally meet the proficiency bars states have established. . . This is about other people’s children and what’s good enough for them. And that [is] the root of the problem.
Educating “other people’s children.” It’s a problem David Brooks at the New York Times touched on in his recent complaint that schools are not educating boys. Brooks writes:
Schools have to engage people as they are. That requires leaders who insist on more cultural diversity in school: not just teachers who celebrate cooperation, but other teachers who celebrate competition; not just teachers who honor environmental virtues, but teachers who honor military virtues; not just curriculums that teach how to share, but curriculums that teach how to win and how to lose; not just programs that work like friendship circles, but programs that work like boot camp.
The basic problem is that schools praise diversity but have become culturally homogeneous. The education world has become a distinct subculture, with a distinct ethos and attracting a distinct sort of employee. Students who don’t fit the ethos get left out.
Today’s public schools—though Brooks won’t come out and just say it—by women for females.

Education should not be run for “other people’s children.” The students and their parents should be in control, especially including boys and their parents. How? Families should have a choice of where to send their children to school, with money following the student. Competition will take care of the rest.

Hope and Change in education comes from school choice.

Hope and Change: Economy

Here are some additional (beyond last Friday’s) sobering economic statistics. They come from an article by Ed Carson, in the conservative Investor’s Business Daily:

➢ The employment-to-population ratio for those aged 25-54 dipped to 75.6% in June, down sharply from 80% in January 2008. Economists view the core employment ratio as one of the cleanest labor market views, because it includes those who have stopped looking for work while excluding retirees and young adults in school.

➢ Entrepreneurial activity is fading, with establishments less than a year old down 26% from the peak of 747,278 in 2006. Not good, because our economic hope lies with the next generation of entrepreneurs.

We earlier wrote about how online courses can help those not in four-year universities better themselves. But the leading way to improve your financial situation is still to start your own business.

Scott Gerber is the founder of the Young Entrepreneur Council, co-founder of Gen Y Capital Partners, and author of Never Get a "Real" Job. Gerber writes:
As millions of college students graduate straight into the unemployment line this year (two out of three carrying student loan debt, at an average of $26,000) educators, employers and politicians need to ask one themselves one question: How much longer are we going to tell this generation that "good" jobs will simply reappear? They'll be waiting for some time -- most job openings by 2020 will be in low-wage professions like fast food, retail sales, and truck driving. Last year, 54% of all bachelor's degree-holders under 25 were either jobless or underemployed. Since 2008, fewer than half of new grads were able to find jobs within a year of graduation -- down from 73% before the recession started.
The old paradigm -- get good grades, go to college, get a job, start a family -- is becoming a luxury for the few. Yet, nostalgically, we still push our young people into this failing system, clinging to hope that the next graduating class will heal itself.
Gerber has found that 40% of young Americans age 8 to 24 either want to start a business or already have. He says, “we must stop discouraging Millennials from creating their own jobs after graduation.” After all, all net new jobs come from startups. What’s missing today is the needed government, academic, and private sector job training and support for budding entrepreneurs.

High school seniors should learn about the alternatives to "real" employment, including freelancing and franchising. That would spur job creation, lower the student loan default rate (currently rising above 9%), and fuel what Gerber calls “a needed cultural shift toward self-sufficiency”:
Just as the immigrant entrepreneurs who built America once did, the key to Gen Y entrepreneurs' success is in building the next generation of nuts-and-bolts, low-overhead businesses that grow organically over time and eventually create wealth – and, in many cases, jobs. . . it's time to embrace a paradigm shift. America has a long history of entrepreneurial thinkers.
A additional endorsement for entrepreneurial self-sufficiency comes from a truly surprising source--New York Times columnist Nicholas D. Kristof. Note, however, that Kristof’s comments relate not to American youth, but to impoverished African villagers. Yet why is the message not universal?

Kristof writes:
[In Africa] and in much of the world, the [anti-poverty] solution is savings groups like [Malawi peasant] Biti Rose’s. . . With a loan of $2, Biti Rose started making and selling a local version of doughnuts, which she initially sold for 2 cents each. “People really liked my doughnuts,” she noted, and soon she was making several dollars a day in profit.
Inspired by her example, [formerly useless husband] Alfred began growing vegetables and selling them; he turned out to be a shrewd businessman as well. . .Biti Rose and Alfred then had the resources to buy seed and fertilizer for all their own land and to lease an additional two acres as well. These days, they hire up to 10 farm laborers to work for them. In the old days, they harvested less than one bag of corn a year; this year, their harvest filled seven ox carts.
Kristof is an incurable liberal. He credits CARE, the international non-profit, with starting the micro-financing group Biti Rose joined (and we know some educated, elite-type CARE agent led Kristof to Biti Rose). Kristof proclaims outside interventions partly work “when they give poor people hope,” making this wonderful entrepreneur’s success more about the city-based expertise that came her way and less about her native self-determination. Kristof at least adds that even without CARE’s help, the savings groups have spread to nearby areas.

Outside help is beneficial, as Gerber himself advocates. But the true heroes, the people who create the jobs, are the folks who lay it all on the line to start a business. "Hope and Change" will be for real, if it results in more entrepreneurs.

Friday, July 06, 2012

Latest Jobs Report: Bad Economy Now Baked in Cake

Reuters says jobs grew by just 80,000 in June, the third straight month below 100,000.  Economists estimate we need 125,000 jobs a month just to stay even with population growth.  Also the country's unemployment rate remained high at 8.2% .

During the second quarter, job creation averaged a mere 75,000 a month, down from averaging 226,000 in the first quarter. The 80,000 June job creation number fell short of economists' very subdued expectations for a 90,000 gain, but Reuters notes there were hopeful signs. Average hourly earnings rose 6 cents, the biggest increase in four months. And total hours worked hit its highest level since November 2008.

In June, we said one more bad report in the final four-month (July-October) pre-election period would be enough to “bake” the bad economy inside Obama’s election campaign “cake.” Now it’s happened. Obama talking about his economic progress or recovery will have little impact, no matter how unemployment ends up in the final three months.

Jonathan Rauch, in the liberal Washington Post, seems to agree. Rauch is worried Obama’s ineffectiveness on the economy will make him a Jimmy Carter, unless Obama steps forward with a bold new initiative. The president should back the Bowles-Simpson plan to rein in the deficit, which will win him independent votes. It will also free him to press for short-term stimulus spending, acceptable to both sides because Bowles-Simpson means the budget will balance long-term.

Rauch means well, but he won’t get Obama’s support for three reasons: 1) Obama is an ideologue determined to raise taxes to support big government, so Obama must first raise tax rates on the rich, while Bowles-Simpson would lower their tax rates; 2) Obama will continue pandering to seniors worried about losing their social security and Medicare, while Bowles-Simpson maintains entitlement reform is essential to any serious budget-balancing effort, and; 3) unlike Rauch, Obama believes he can win without Bowles-Simpson.

We have been writing for years that Democrats think Obama can win by just bringing home most of a base that's roughly 60% of the electorate. Still, in a bad economy it’s a tricky task, which explains why the “white working class” has now been added to Obama’s target groups.  The white working class may well decide who carries Ohio. The liberal New Yorker’s John Cassidy has outlined for us the latest Democratic strategy, which goes for less educated whites even as it drops efforts to claim economic success:
“We’ve got to make sure people fully appreciate Mitt Romney is not some safe alternative,” David Plouffe, one of Obama’s senior advisers, told the [New York]Times. Assuming the economy doesn’t get any worse, Obama’s strategists believe that they can eke out a narrow victory by mobilizing the same coalition that the campaign relied on in 2008—young people, minorities, women, and highly educated professionals—and by turning enough white working-class voters against Romney to deprive him of the surge in the Midwest that he needs in order to win.
This strategy is up against a hard reality. Looking at our update on how Obama is doing in meeting his minimum employment goals (chart below), it seems likely he will fall short. Job creation could average over 158,000 a month, but how can the president brag about creating at best a net few thousand jobs (and he’s certainly not there yet)? In fact, Obama has already shifted his rhetoric, instead crowing about creating 4.2 million “private sector” jobs over “26 months.” Of course, one can always be selective about the employment category and the time period one uses. It's just "lies, damn lies, statistics."

And no matter what, Obama’s still left with the current 8.2% unemployment rate, highly unlikely to fall to 7.8% in three months.

Wednesday, July 04, 2012

July 4 Thoughts on American Exceptionalism

“intense love of country defines Americans and, compared to many, sets us apart[: a] National Opinion Research Center [study] ranked the United States first in national pride. . . But on this July Fourth, we face a disturbing paradox: Our love of country increasingly divides us.”

--Robert Samuelson, Washington Post

In the beginning, we had no standing army. We needed soldiers. We did have a cause and 3,200 miles of ocean separation from England.

The history of the world is one of elite control over the masses. Political control backed by money, brains, and weapons. Athens had democracy, yes, but with 20 slaves to each freeman. Every nation we deal with today had in its past a king, emperor, caliph, or pope, along with some form of nobility. Civilization has always been top-down, elite over uneducated masses.

The American Revolution was the first to put into practice (imperfectly at first, we had slaves, women couldn’t vote) the principle that “all men are created equal” with rights to “life, liberty, and the pursuit of happiness.” This clear, simple, profound idea, the product of European enlightenment, helped rally an army of free farmers to overthrow a distant king.

We didn’t trust authority; we had fought and died for liberty. The result was a constitution of divided power, a limited state, and a guaranteed bill of rights. It was up to the individual to make of his freedom whatever he and his family could. It worked for a vast, underpopulated country blessed with rich farmland, natural resources, and protective oceans. The Protestant faith, with its emphasis on individual responsibility—people reading their own Bibles, acting on their own beliefs—underpinned this American liberty.

The industrial revolution pressed against our farm-based population, pulling people into urban areas and into dependency on government to offset raw corporate power. By 1920, half the population lived in cities. Then, at the same time, farm prices collapsed with the end of World War I price supports, sending the farm states into depression well before the Great Depression that engulfed the rest of the economy in 1929.

Industry brought back prosperity with World War II and its aftermath, and big business shared power with big labor under Democratic political control in the Blue Model era. As people prospered, families moved to suburbs in an imitation return to the rural life, enjoying the individual freedoms Americans had earlier valued.

It was 1962, John Kennedy was president, the U.S. in the Cuban Missile Crisis had defeated its chief Cold War rival and brought Americans increased security. Prosperity without inflation was unfolding, with California, now America’s largest state, leading the way.

Here’s a brief summary of what, as a result of government action, then went wrong with the American experiment:

➢ The Vietnam War slaughtered 58,000 Americans for no strategic purpose (Vietnam is a current U.S. trading partner), tore the Democratic Party apart, and triggered inflation at home.

➢ An underfunded (see: "Vietnam, costs") Great Society failed to end poverty or pacify Blacks, but did, through busing and forced housing integration, alienate working class Democrats from their limousine liberal superiors.

➢ The opposition Republicans ruined their subsequent opportunity to govern due to Richard Nixon’s corruption and his implementation of price controls that when terminated, unleashed a furious inflation followed by deep recession.

➢ Jimmy Carter made things even worse, leaving the nation humiliated in Iran and with an all-time high “misery index” of inflation + unemployment; his term was the fourth failed presidency in succession.

Ronald Reagan turned America around, lowered taxes, and checked government growth. He also helped America emerge victorious from the Cold War. American industry was riding high during 1981-2000, creating 42 million jobs, and perhaps benefiting from having a mere two years (1993-95) of united (mis)rule under a single party. Bill Clinton proclaimed “the era of big government is over,” worked closely with industry, and compromised with Republicans.

Bipartisan cooperation unraveled during Clinton’s second term when the president’s unacceptable personal behavior came to light, and Clinton, relying heavily on the Democratic left wing, responded by digging in rather than resigning. The nation split sharply along ideological and cultural lines.

That split hardened further when Bush 43 lost the popular vote to Al Gore in 2000, then barely won the electoral vote only after a 5-4, conservative-liberal Supreme Court decision awarded Bush the needed margin. To Democrats, Bush 43 was an illegitimate president, and Bush completely lost the liberal elite after taking the country into Iraq in 2003, a war that went very badly through 2006. By then, Bush faced a hostile Democratic congress that gave him no quarter.

When Republicans govern poorly, Democrats—the party of government—counter with their most ambitious big government solutions. So it was with Franklin Roosevelt in 1933, and so it was with Barack Obama in 2009, following the September 2008 worst U.S. economic collapse since the Great Depression. With his top adviser proclaiming, “you never want a serious crisis to go to waste,” Obama set about growing the federal government as never before, moving America farther than ever away from our small government, individual responsibility roots, moving instead toward a European-style, top-down social welfare state.

So we have arrived at the point where Robert Samuelson (quoted above) believes American national debates have become -- in the minds of each side – -
a climactic struggle for the nature and soul of America. One side is allegedly bent on inserting government into every aspect of our lives and suffocating individual responsibility and effort. The other is supposedly beholden to the rich, committed to "survival of the fittest" and indifferent to everyone else.
Samuelson traces the backdrop of this struggle to, as Alexis de Tocqueville wrote, Americans’ veneration of both liberty and equality. De Tocqueville argued Americans would ultimately favor equality over freedom, because its material benefits are more immediate and tangible.

Samuelson does cite evidence from a recent Pew poll (reported here) that asked people to pick between "freedom to pursue life's goals without state interference" and the "state guarantees nobody is in need." Americans selected freedom 58% to 35%, while Germans picked state guarantees 62% to 36%.  But though Americans believe that "success in life" is determined by individual effort not by outside forces, Samuelson thinks that in their voting habits, Americans often prefer security.

Samuelson concludes that because both sides fear their version of America is threatened, love of country now divides us where it should unite.

Yet isn’t division basic to democracy? Nobody has a corner on the truth; we compete in the free market of ideas, under guarantees offered by an exceptional constitution.

Tuesday, July 03, 2012

Understanding Economic Prosperity

It’s economic growth, stupid.

Economic growth makes good things possible—better learning and jobs for those with limited educations, health for children, security for old age, funds to preserve the environment and save great architecture, public safety, fine arts, transportation that works. Grow the pie. And what makes the economy grow? Competition, with profit the reward.

Michael Boskin, Stanford economics professor and one-time chair of Bush 41’s Council of Economic Advisors, just commented on President Obama’s 54-minute speech on the economy, delivered June 14:
Obama suggested that the profit motive is somehow ignoble, an opinion shared by many on the far left. But every student learns in introductory economics class that the pursuit of profits is essential to a successful economy, allocating resources to the use consumers value most. This is not exactly a new insight. Writing in 1776, Adam Smith noted, "It is not from the benevolence of the butcher, the brewer, or the baker that we can expect our dinner, but from their regard to their own interest."
Boskin says Obama should have “set aside his big-government social-engineering agenda, from energy to health-care reform,” because the current weak recovery is “the worst possible time to add such a cost burden and uncertainty to the economy.” Instead, Obama gave the country 13 consecutive quarters of economic growth below 4%, the longest such string since World War II, with growth during the period averaging only 1.4%.

On unemployment, Boskin quoted Obama’s saying, "the private sector is doing fine" as he called for subsidizing state and local government jobs. That’s because Obama believes government is where the jobs problem is centered. The truth, as Boskin says, is “there are 11 unemployed private-sector workers for every unemployed government worker.”

In Boskin’s view, “President Obama should put Adam Smith's The Wealth of Nations at the top of his summer reading list.”

Robert Tracinski, conservative editor of the “Intellectual Activist,” is similarly intrigued by Obama’s apparent economic illiteracy. Tracinski asserts that Obama sees the beneficial effect of government employment—prosperity for those bringing home a state or municipal paycheck. But Obama doesn’t visualize all the private-sector jobs never created because tax collections re-channel that money to government. To Tracinski:
This . . . reflects a deeper ideological agenda: a suspicion of private-sector economic activity as being driven by greed and profit, while public-sector employment is noble, selfless, and public-spirited. . . Consider. . . the moral inversion of this perspective: those who consume wealth produced by others are assumed to be good, while those who actually produce the wealth in the first place are . . . the bad guys. . . Obamanomics [is] focus on government action, government spending, government hiring as the key to everything—while disparaging private profit-making. It is also the reason why Obamanomics is failing.
One could say Western Europe has profitable industry and a healthy public sector. Obama is merely trying to move America in a social democratic direction (without using the words). Though he won’t say so now, Obama would use a European-style “Value Added Tax” to finance our new universal health insurance. That’s all. Don’t we want to raise taxes to pay for needed big government?

O.K. So how is big government social democracy working for those in Greece (-3.5% GDP, World Bank, most recent year), Cyprus (1.0%), Spain (-0.1%), Italy (1.5%), Portugal (1.4%), Ireland (-0.4%), Belgium (2.3%), and France (1.5%)? In the United Kingdom (2.1%)?

Pollster Scott Rasmussen of “Rasmussen Reports” has a twist on capitalism’s importance to America’s future. He writes,
Individual Americans recognize that they have more power as consumers than they do as voters. Their choices in a free market give them more control over the economic world than choosing one politician or another.
Conservatives are forever asking government to get out of the way and to allow the free market economy to work. Rasmussen is hinting government itself should operate as a free market, offering people a range of choices, empowering the voter again and again.

America is still home of the dynamic, healthy private sector, of the world’s most advanced health care, of competitive higher education. Adam Smith, 1776. America, 1776. Exceptional America, 1776-2012.