Buy my e-book A Conspiracy of Wizards
As I’ve frequently written, the fundamental ideological dichotomy in American politics today is not the right/left dichotomy (or “statist”/libertarian, or pro-corporate/anti-corporate), but rather the rational-people-of-goodwill/irrational-people-of-ill-will dichotomy. Perhaps that latter dichotomy is always the real dichotomy in politics, in all times and places; or, if not the real dichotomy, then at least the real poles of perpendicular axes, with various specific ideological orientations falling within the space thus defined. How reasonable are the various positions being advanced? How much in service to humanity?
As is usually the case, people at opposite ideological extremes are oddly similar, obsessed with oversimplistic panaceas in a complex world, angry that others fail to recognize the one absolute truth of which they are so prematurely and impenetrably certain. Just as fundamentalist Christians and fundamentalist Muslims share a tendency toward theocratic moral tyranny, the extreme right and extreme left of political ideology share a failure to recognize that we are embedded in a complex dynamical social system, that the reality with which we are coping and the ways to do so effectively are organic rather than mechanical in nature, and that dogmatic assertions about what single change or doctrine need be advanced, without adequate consideration of that complex organic whole, are counterproductive.
What we need instead of these sweeping reductionist ideologies is a commitment to systemic understanding and systemic action. Not surprisingly, extreme ideologies tend to be anti-intellectual, either explicitly refuting the value of applying our minds to the challenges we face as a people (as is frequently evident among some factions on the far right today), or implicitly eschewing the value of skepticism and scientific methodology as applied to social and political issues by clinging to blind ideological certainties instead (as is too often evident on the far left as well as the far right).
We see this commitment to systemic understanding and action emerging from time to time in what to many are counter-intuitive positions being advocated by responsible representatives of otherwise highly opposed ideological orientations. I recall, for instance, the ubiquitous public relations push of a couple of decades ago for continued investment in space technology, putting various pairs of ideological opposites on screen together lauding the benefits of doing so. For many, the notion that we should invest significant amounts of our limited resources in aerospace research struck many as counter-intuitive: We have so many problems to address here on Earth, why should we be squandering precious resources on something so frivolous as the development of exotic technologies for use beyond the Earth’s atmosphere?
Of course, the case for investing in such technologies is that, by doing so, we create a constant flow of valuable off-shoots with very significant applications here on Earth. Simply by trying to understand and work with some highly complex aspect of our surrounding reality we benefit ourselves, even if the focal aspect of our surrounding reality seems remote or irrelevant.
A similar, also to some counterintuitive, example of a policy position that all reasonable people support is the need for Americans to invest in our infrastructure. There are those, lost in the error of linear thinking in a non-linear world, who insist that we cannot invest in infrastructure because we have a huge and growing national debt, and that therefore no investment is justifiable. This is simply an economically illiterate position, not understanding how economic growth occurs, both as a historical fact and as a basic systemic reality (see, e.g., Real Fiscal Conservativism, The Economic Debate We’re Not Having and The Real Deficit).
To underscore the degree to which investing in infrastructure is a no-brainer, the presidents of both the U.S. Chamber of Commerce AND the AFL-CIO have teamed up to encourage Congress to pass the president’s call for investment in infrastructure (http://www.uschamber.com/press/releases/2011/march/us-chamber-afl-cio-urge-infrastructure-bank, http://blog.aflcio.org/2011/01/26/union-movement-business-back-obamas-call-for-infrastructure-rebuild-and-other-sotu-reactions/).
The right has long claimed that government is inefficient because it doesn’t create wealth, and doesn’t act in ways similar to how private enterprise, the engine of wealth production, acts. The first point is a red herring, because the only sector of our economy that “produces wealth” directly is labor; all other sectors perform auxiliary functions (e.g., management, capital investment, etc.). Government, in a modern capitalist economy, imperfectly performs vital functions for the production of wealth, including reducing transaction costs and internalizing externalities (see, e.g., Collective Action (and Time Horizon) Problems and Small Government Idolatry).
The second point, that government doesn’t act like private enterprise and so fails to perform as well, has some validity in some contexts, but is mere misdirection when, at those times when government is indeed employing sound economic principles in ways very similar to private enterprise, the same critics obstruct rather than applaud such efforts. Investing in infrastructure, and even doing so through deficit spending, has long been a hallmark of successful private enterprise in a modern capitalist economy. Businesses large and small depend on credit as the lubricant of economic growth, and it makes perfect sense for governments to do the same.
Just to put our debt into perspective: We currently owe an amount equal to our annual GDP, and are paying interest on new debt that is about equal to the rate of inflation (that is, when adjusted for inflation, we’re paying zero percent interest on new debt). An average homeowner, conversely, borrows about four times their annual income in order to purchase their home, and pays a far higher interest rate on that debt. Without this form of credit commonly in use, very few people would be able to afford to purchase their own homes. Credit, even proportionately far larger than our national debt, and at a far higher interest rate, is clearly not by definition a bad thing.
The problem is not our current debt, or even any immediate additional debt we undertake, but rather our ability to make economically sound policy decisions as a nation, including implementing a plan to control the long-term rise in debt (without which our national debt will eventually become the problem that some, erroneously, consider it now to be). One aspect of such economically sound policy making is the ability to use deficit spending to grow the economy in order to produce both greater individual prosperity and greater future public revenues in order to reduce our national debt and increase our national prosperity in the long run.
It’s time to leave the blind ideological noise on the margins of our public discourse, where it belongs, and bring well-informed analyses in service to human well-being front and center. When the leaders of organized labor and big business are both advocating the same policy, and when that policy has been proven by both world history and private enterprise to be a sound one, all reasonable people should have the good sense to rally around it.
It’s more difficult than ever to talk about what’s right with America these days, both because we’re still languishing in a persistent economic downturn, and because the most visible movement in America today is a single screaming complaint against everything that America, as a nation-state, does. As Susan Greene discusses in her column in today’s Denver Post (http://www.denverpost.com/greene/ci_16418853), it is political fodder for both candidates and citizens to decry the alleged laziness and inefficiency of public servants, without acknowledging the hard work, low salaries, and deep commitment that is widespread among them.
Certainly, there are inefficiencies, there are the issues of “goal displacement” and “agency problems” that are inherent to large bureaucratic organizations. These are authentic institutional challenges posing a legitimate need to address them to the best of our ability. But that demand on our ingenuity should not be confused with condemnation for the essential work that is done, and must be done, through our public agencies.
The problem is that the many indispensable things that America does, and that American public servants do, are so fully incorporated into our lives, so much a part of our expectations of what is and what should be, that they have become invisible to most of us, taken for granted and unacknowledged unless and until they’re gone. And even then, the competing streams of often inaccurate information allows people to blame the decreased quality of their lives resulting from the lack to other forces altogether, perversely leading to an increased demand for the shrinkage of government that caused the material and palpable decreased quality of life in the first place.
Such is the dilemma we’re in now. A decades long Republican-driven agenda of deregulation led to underregulated financial markets, the consequences of which were well foreseen (and frequently trumpeted on shows such as 60 Minutes, as was the inevitability of a major large-scale terrorist attack in the United States and a clear identification of our vulnerabilities) at least as long ago as the 1990’s, resulting in 2008 in “the biggest economic crisis since The Great Depression,” driven by a financial-sector fabricated housing bubble collapse and subsequent crash in values of mortgage-based securities.
If, at the end of the Bush administration, a deal had been offered to the nation that we would be in the economic condition we’re in today less than two years later, with a weak but stabilized economy, with an end to net increases in job loss and less than 10% unemployment, with the fairly clear prospect of a gradual return to economic growth and prosperity, every sane human being would have wiped their brow in relief, and screamed, “God yes! I’ll take that deal!”
But instead, the disingenuous Right gets away with trumpeting that 3.3 million jobs have been lost during the Obama administration, and even stating that that loss is a direct result of stimulus spending, disregarding that the rate of job loss was accelerating right up until the passage of Obama’s first stimulus bill, and began decelerating right after (http://www.businessinsider.com/chart-of-the-day-jobs-lost-in-the-bush-and-obama-administration-2010-2), and that the non-partisan Congressional Budget Office has reported that the stimulus bill created between 1.3 and 3.4 million jobs that would not otherwise have existed (Organized Ignorance and the Amplified Echo-Chamber of Disinformation).
More importantly, those of us who have actually studied the legal, economic, and physical complexities of things like energy and financial markets, and recognize the role of information asymmetries in the ability of those in centrally located market positions to play markets to the advantage of a few at the sometimes extreme expense of the public (such as happened in the Enron-fabricated California Energy Crisis of 2000-01, and the financial sector collapse of 2008), are aware of the immensity of the task of creating regulatory regimes sophisticated enough, and well-enough funded, to keep up with and police the opportunities for socially disastrous mischief. (See, e.g., Monday Briefs: Labor Markets, Mandela, & High Frequency Trading, Regulation of Financial Markets)
Not only the large demand on the nation-state to provide, maintain, and grow an extensive enough and sophisticated enough regulatory architecture to keep up with technological and institutional advances in insiders’ ability to game the system at the public expense, and unsure the smooth and efficient operation of our markets, but also the large demand on necessary infrastructural maintenance and improvement to reduce transaction costs, attract investment capital, and, in general, grease the gears of the market economy in ways that no private investment capital can’t fully accomplish (due to long time-horizons of return-on-investment, for instance).
We have been underproducing these public goods essential to the smooth functioning of our markets, with Democrats fighting to better approach the optimal level, and Republicans fighting to reduce our investment even more, moving in the direction of increased dysfunctionality. Doing as much as we are doing (and, preferably, considerably more) on these dimensions is what’s right with America; the populist and corporatist pressure to do less is what’s wrong with America.
Beyond these demands on the government to provide the material and regulatory infrastructure necessary to the maintenance of a robust market economy, is a duel-natured demand to make a similar investment in our human capital. As I argued in The Real Deficit, there is both an economic and social imperative to do so: We need a well-educated work force capable of competing in the global economy both to be economically competitive as a nation, and to enable our citizens to occupy the high-skilled high-salaried jobs that contribute to individual prosperity and financial security.
What’s right with America is that, until recently, we have maintained a vibrant system of state universities and government subsidized student loans which have enabled most academically capable young people to take advantage of higher educational opportunities. What’s wrong with America is our diminishing commitment to continue these policies, the erosion of higher education opportunities for middle and lower class Americans.
Of course, those young people need to have not only access to affordable higher educational opportunities, but also the academic preparation necessary to utilize those opportunities successfully. American public education is the target of widespread and, in some ways, much deserved criticism. But the problems with American public education are much more a function of factors outside the schools than within the schools. What our schools themselves have been doing, to the extent that we have allowed them to do it, is very much what’s right with America, for we have gotten an enormous return on our investment in public education. We have, on average, a far higher-quality teacher pool than the salaries and benefits themselves alone would be able to purchase, because many people who simply love to teach and love children go into that profession because it’s what they were born to do.
Even so, there are many deep structural problems with American education, within the schools as well as without. The profession attracts not only the highly committed, but also those who are not competent but can pass the threshold of entry into education, because the demand is so high and the compensation so relatively low. We cannot improve the teacher pool simply by eliminating tenure and removing “bad teachers,” because unless we alter the supply-and-demand equation, all we would accomplish by doing so is to stack the deck just a little more against attracting the highest quality human capital in the first place (by reducing incentives to enter, without counterbalancing the change in incentives elsewhere).
But, despite this weakness in a generally strong teacher pool, and the overwhelmingly risk-averse, ossified, autocratic administration of large school districts (qualities which further undermine the efficacy of the elimination of teacher tenure, by ensuring that almost as many excellent teachers as poor ones are likely to be weeded out as a result), the biggest problems with American public education are, in combination, the deep and widespread cultural anti-intellectualism that continually undermines the educational mission in most out-of-school social contexts, and the general failure to create robust school-community partnerships and programs to better prepare and include parents in the educational mission.
What’s right with America is that we currently counterbalance the relatively low professional salary we provide to teachers with an attractive package of benefits, ample vacations, and unusually high job security. What’s wrong with America is educational reform that kicks responsibility for deep structural and cultural problems down the hierarchy, blaming and punishing those who are, by and large, the strongest component of American public education for defects over which they have virtually no control, and, by doing so, undermining that strong pillar without strengthening the weaker ones. What’s right with America is maintaining the revenue streams that schools require to address these challenges. What’s wrong with America is the zealous movement committed to continuing to reduce and eliminate those revenue streams. (For more on education and education reform, see, e.g., Real Education Reform, A Positive Vision For Colorado, Are We Civilized?, and Education Policy Ideas).
Beyond the regulatory architecture and material and human infrastructural investment that only government can provide, and our commitment to public education as the foundational institution in preparing our citizens to prosper individual and contribute to a robust state and national economy, there are a host of challenges that society faces, and commensurate demands on government, that can be met at considerable present cost in return for both far greater future savings, and a generally improved quality of life for a larger spectrum of the population. I have discussed these at length in essays such as The Most Vulnerable Americans, The Vital Role of Child, Family, and Community Services, Community, Family, and Crime Prevention, and Sound Mind, Sound Body, Sound Society; Sound Good?.
What’s right with America is that we have, by and large, elected people to public office who are more often than not pretty well-qualified for the job, people who know some economics and some law, are aware of the devastating suffering of millions of children, recognize the magnitude of social challenges we face that can only be addressed through the agency of government, and, in general, have some understanding of the real demands of governance. What’s wrong with America today is the massive and massively misinformed populist movement, financed by corporate money eager to keep the candy store unlocked and unguarded, pushing to put people who reflect and embody their own lack of comprehension and misconceptualizations into office, and threatening to do so successfully, at great and enduring cost to all Americans.
Colorado has several comparative advantages that position us to combine a commitment to the preservation of our natural endowment; a commitment to the preservation, refinement, and expansion of the pleasant lifestyle that many enjoy in our beautiful state; a commitment to contributing to the development of the New Energy Economy (an inevitable component of future global economic development); and a commitment to fostering the most robust, sustainable, and equitable state economy, and most proactive, efficient, and effective state government possible.
Our natural endowment, particularly our spectacular mountains, are an economic asset both directly, in the tourism industry, and indirectly, as an attractor for investment capital by those who want to locate small start-ups, particularly in high-value-added information-intensive economic sectors, in the most attractive locations possible (since such sectors have no geographic constraints). And, of course, many Coloradans treasure our natural beauty for its inherent, aesthetic and recreational value, considering it to be one of our greatest assets, even independently of economic considerations.
For these reasons, we need to place a very high emphasis on the preservation of this endowment, carefully regulating other industries and practices (such as mineral extraction) that pose a threat both to the environment, and to public health and safety. Fortunately, despite erroneous ideological assertions to the contrary, mineral extraction, as an economic enterprise, is not highly sensitive to regulations or severance taxes, since there is very little flexibility in where minerals can be extracted (they must be extracted where they are found). Furthermore, since extracted minerals are sold in national and international markets, the increased costs of state regulations and taxes have only a marginal effect on market prices. In other words, the benefits occur within the state while the costs are distributed all over the world. For these reasons, sound policy requires that mineral extraction be a well-regulated and taxed enterprise.
Not only is Colorado rich in minerals, but it is also rich in sun and wind and the researchers and institutions doing the most to tap the energy contained in them. The future can rarely be predicted with confidense, but one thing that is virtually certain is that clean, renewable energy technologies are a growth industry, and will be enormous economic engines in the not too distant future. Foresight pays off in the long run. Investing in the New Energy Economy today, despite the modest size of that economc sector at present, and regardless of short term ups and downs in the market for “green energy”, is sound economic policy, and a smart move for the state of Colorado.
Our natural endowment is part of our pleasant lifestyle, with hiking trails, ski runs, rocks to climb and mountain rivers to float down, and spectacular vistas to appeal to all who enjoy nature’s wonders. But the Colorado lifestyle extends into our cities and suburbs as well, with excellent cycling opportunities, beautiful pedestrian malls, open spaces, and an increasing investment in the combination of excellent public transportation and sustainable, localized, aesthetically pleasing urban development. Continuing in this direction not only provides Coloradans with the benefits of all of these public goods, but also attracts the entrepreneurial capital of precisely those kinds of small start-ups that can create the most robust state economy possible. We live in a world in which the most information-intensive industries (e.g., computer software, and cutting edge technologies) create the greatest number of high-paying jobs, and contribute the most to the local and global economy. And such start-ups in such industries locate in places that provide the combination of natural beauty, pleasant life-style, and infrastructural investment that Colorado can provide, if we pursue wise policies.
But to attract such investment capital, and the young professionals and their families that bring it, we need to provide, competitively, what they are looking for: A well-developed human and material infrastructure on which they can depend, and the assurance of the availability of excellent and affordable public and higher education institutions for their children. We are currently, disgracefully, near the bottom of the country in investment in both public and higher education, and that is a very powerful disincentive to small information-intensive start-ups to locate here. More importantly, it is a moral failure on the part of the people of Colorado. As much of a cliche as it may be, our children are indeed our future, and failing to invest in them, to provide them with the best education possible, simply because an alliance of popular economic platitudes and well-funded corporate interests have displaced economic analyses, is a choice that can end up crippling and impoverishing this state, when nature has endowed us with such soaring opportunity.
There is a clear path forward for Colorado, a coherent strategy that preserves our natural endowment, fuels our economy, and secures a high quality of life for our residents. We need now to make sure that we elect the people, and cultivate the public commitment, to realize this vision, and create a more prosperous, sustainable, and opportunity-rich future for all Coloradans.
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Buy my e-book A Conspiracy of Wizards
There is a major movement in our country based on isolating individual issues, considering them in a vacuum, eschewing the products of academic research and careful analysis as “elitist,” insisting that arbitrary certainties are far more responsible and deserving of respect, struggling to disintegrate our social bonds to our mutual detriment, and fueling adherents’ angry opposition to applying our minds and hearts to the challenges and opportunities we face as a a people with fabricated absurdities and oversimplistic platitudes. One of the false certainties of this movement is that public spending at levels at or near what they currently are, and taxation at almost anything above an impossibly low level, is an act of violence against future generations, by bequeathing to them a ballooning debt and a crippled economy. But deficits come in many forms, and economies are more certainly crippled by turning any one legitimate consideration into an idol at whose alter reason and knowledge are sacrificed.
First, it’s important to note that this popular conservative vision of how economies work is cartoonishly oversimplistic. Even conservative economists almost universally agree (I haven’t heard one contradict this yet) that the continuation of tax cuts to the very wealthy is fiscally and economically indefensible. Most economists, even conservative ones, recognize the need for a complex regulatory structure to address information asymmetries in our complex modern economy. And most economists recognize the importance of investing in our human and material infrastructure. We will not reduce our national debt, nor reinvigorate our national economy, by starving our human and material infrastructure of the funds necessary to make them functional and competitive.
America, not long ago, led the world in college graduates. We are now far behind many other countries. Our leadership as innovators and an economic powerhouse will deteriorate as a result of our deteriorating commitment to this foundational demand upon us as a people. Jobs and capital will continue to gush from this country like oil from a blown well, and our attempts to cap the leak will be just as desperate. Eventual success, even if such is achieved, will leave just as much irreparable devastation in its wake.
American college tuitions are skyrocketing (http://www.denverpost.com/news/ci_16273813), in large measure due to the anti-tax, anti-spend mania of overzealous libertarians. In revenue-starved Colorado, the problem is far greater than it is in less ideologically fanatical states. As a result, not only will America become increasingly less attractive to foreign capital, and not only will American employers be increasingly forced to seek more and more of their high-salaried, highly educated employees from countries like India, where well-educated labor is available at bargain prices; but Colorado will become increasingly less attractive even in comparison to other regions of the country. Entrepreneurs looking for a beautiful place with a pleasant life-style to locate their information-intensive start-ups, will think twice about choosing Colorado (which would otherwise, under smarter policies, be a front-runner), knowing that the state will not be able to provide enough of the human capital necessary, can’t be counted on to maintain the material infrastructure necessary, and won’t provide their children with the kind of education necessary, to attract and hold them.
The most critical deficit we are facing as a country, and more dramatically as a state, is the deficit in our investment in the minds of our children and young adults (the most vital of all naturally resources, tragically squandered); in the state-of-the-art infrastructure that a robust, world-class economy requires; in our hopes and dreams; and in our future. And that’s the deficit that is most urgent for us to get under control.
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