Sunday, May 6, 2012

The Carrot and the Stick. Zakaria Forgot the Stick

In his Time Magazine article, “Are America's Best Days Behind Us?” Fareed Zakaria laid out the problem, but fails to address key elements in the solution.

Fareed Zakaria refers to himself as a centrist, and in light of today’s highly polarized political climate, he may be. But like most media figures, he misses a key element to what made America great, and why we need that element to extend our exceptionalism in the new century: personal freedom and responsibility.

Reference “the carrot and the stick.” He understands the carrot. As he points out, he came to America from India because of the opportunities here, and was a classic example of using the system to become successful as well as an admirable and respected public figure. As a motivated person, he seeks the carrot, and assumes others will as well. Conversely, Zakaria does not understand the motivation of the stick. Understanding your next meal is dependent on getting off the couch and getting a job is highly motivating.

In the article, Zakaria cites Mancur Olson’s 1982 book “The Rise and Decline of Nations” in which Olson outlines the decline of Great Britain and the rise of Germany as economic powers after WWII even though Britain was on the winning side and Germany was the loser. Zakaria’s analysis of Olson’s theory reads “British society grew comfortable, complacent and rigid, and its economic and political arrangements became ever more elaborate and costly, focused on distribution rather than growth. Labor unions, the welfare state, protectionist policies and massive borrowing all shielded Britain from the new international competition. The system became sclerotic, and over time, the economic engine of the world turned creaky and sluggish.” Sound familiar? With the exception of the part about protectionist policies, you could substitute “the US today” for Great Britain above, and the statement would be accurate

The US was on the winning side as well, but we were a young, sleepy country without the encumbrances of Britain, and the war helped rev our economic engine. With the December 7, 1941 events at Pearl Harbor, when Japanese Admiral Isoruku Yamamoto ostensibly wrote in his diary “I fear all we have done is to awaken a sleeping giant," he was prophetic beyond his military analysis. Response to the war woke us up to the potential of our manufacturing capabilities. One could also argue that “Rosie Riveter,” born in WWII, carried on after the war and laid the groundwork for American women being the powerful force they are.

Zakaria cites the post-war boom in the 50’s. “The decisions that created today's growth — decisions about education, infrastructure and the like — were made decades ago. What we see today is an American economy that has boomed because of policies and developments of the 1950s and '60s: the interstate-highway system, massive funding for science and technology, a public-education system that was the envy of the world and generous immigration policies.” True enough. But paramount as an accompaniment to those policies was an inbred commitment by US citizens to do their share and contribute. Remember John Kennedy? “...ask not what your country can do for you; ask what you can do for your country.” Really? Isn’t that about the time when exactly the opposite started to happen? Kennedy’s successor, Lyndon Johnson, with help from both political parties, initiated the “Great Society,” instrumental in diminishing individual motivation and plunging millions into a constant state of dependency. Today the more applicable statement among many is “Ask not what you can do for your country, demand what your country can do for you.”

I remember sitting down to dinner and watching the news in the late 90’s when CA governor Pete Wilson was attempting to reduce “welfare” payments to dependent families. One 18-year old woman with four kids was incensed with the reductions, and demanded she receive what she felt was due. “I’d like to see Pete Wilson raise four kids on what they are paying me!” The fact that she was 18 years old with four kids wasn’t the worst part. Nor was the fact that she was demanding taxpayers pay her way. No, the worst part is that she was not embarrassed. In Zakaria’s 1950’s, had she collected public benefits, she would have been apologetic, and would have vowed to get off public dependency as soon as she was able. The attitude of being considerate of your fellow person and feeling grateful to those who supported you was in the process of being destroyed.

Yet Zakaria dismisses the considerable intrusion of creeping socialism into the American fabric as a cause of our diminishing economic dominance by citing examples of successful socialist countries, notably Denmark, Sweden, Norway, and Finland. While correct in his analysis, he fails to acknowledge that these countries are small - tiny with respect to the US. The personal attention policy makers can inject into a small economy is considerably different than in a large one. Rules can be adjusted, policies can be changed, and wrongs can be righted in comparatively rapid fashion. Zakaria states that “flexibility” is necessary going forward, which is much harder in a large society. More importantly, throw into the mix that those countries are ethnically and culturally quite homogeneous, and you create a considerably different canvas. The diversity that exists in America is both a strength and a curse. And the strength is definitely not in fostering social/moral cohesiveness and administration of governmental programs, where all groups try to grab or maintain their “fair” share.

Interestingly, Mr. Zakaria’s article quotes Harvard historian Niall Ferguson’s book, “Civilization: The West and the Rest,” in which Mr. Ferguson states: "For 500 years the West patented six killer applications that set it apart. The first to download them was Japan. Over the last century, one Asian country after another has downloaded these killer apps — competition, modern science, the rule of law and private property rights, modern medicine, the consumer society and the work ethic. Those six things are the secret sauce of Western civilization." I agree. I read the list over few times and can’t find redistribution of wealth or indications of a nanny state on the list.

Mr. Zakaria goes on to say that we need to increase spending. And while “investing” in the future in similar manner as we did in the 50’s could very well be a good idea, we first have to plug the leak in the boat. You can’t row your boat very fast - indeed keep it from sinking - if it’s under water. We need to get our fiscal ship in order and stop the bleeding - then think about “investing” in the future. The hard truth is that we don’t have the money to invest in the infrastructure of the 50’s directly because of wild unnecessary spending and entitlement programs we took on after our economy started to boom and money was flush.

Most importantly, it is extremely risky to “invest” in things called for by Mr. Zakaria unless we get the corresponding change in societal attitudes to more closely reflect our culture of the 50’s. Back then the goose was laying the golden egg and we took away her food. We gave it to the pigs.

The carrot is out there, it always has been. We need to bring back the stick.

Note: This article was previously published on American Thinker: