Tuesday, February 23, 2010

Tom Friedman's Narrative

New York Times columnist Tom Friedman has joined the growing chorus of those expressing disappointment in President Obama. Of course, the fact that Obama turned out not to be the second coming of Christ, as so many had expected, was bound to lead to disappointment. As is typical when I read Friedman, I find his particular narrative of the situation interesting, and I disagree with it in some fundamental respects.

Friedman invokes a story from Hebrew scripture. Joseph (he of the technicolor dreamcoat) interprets a dream for the Egyptian Pharaoh who has imprisoned him. According to the Book of Genesis, Joseph tells Pharaoh, "Seven years of great abundance are coming throughout the land of Egypt, but seven years of famine will follow them. Then all the abundance in Egypt will be forgotten, and the famine will ravage the land."

In Friedman's version, the U.S. has experienced not seven, but 70, fat years (since the end of the Great Depression circa 1940), and has now entered into the lean years. The last couple of years have, of course, been lean. Economic growth recently resumed. Time will tell whether the American economy bounces back, as it did after a similarly serious recession in 1981 and 1982. That recovery sparked a quarter century of nearly uninterrupted growth. With the American fiscal situation looking bleak for several years, even before the bulk of the baby-boomer retirements begin to put further strain on Social Security and Medicare, significant work needs to be done, in order to produce another such strong recovery.

In analyzing that fiscal problem, Friedman is totally focused on the budget deficit. A deficit can be decreased in either of two ways: 1) cutting government spending, or 2) raising taxes. He calls Republicans "irresponsible" for not wanting to raise taxes.

I agree that the deficit needs to decrease. But, as I see it, the more important goal is to reduce government spending, regardless of any balance or imbalance in the budget. Whether spending is financed by taxation or borrowing, it takes resources out of the private sector where they could have been used productively. Politicians spending other people's money are never going to allocate resources as efficiently as people handling their own money in free markets.

Certain government functions are necessary. Expansion of government beyond that necessary minimum imperils economic growth.

Apparently, Friedman thinks that taxes have been too low for several decades. He writes that "in these past 70 years, leadership ... has been largely about ... lowering taxes." But data from the federal Office of Management and Budget show that federal taxes as a percentage of gross domestic product have increased from 6.8% in 1940 to 14.8% in 2010. Tom's definition of "lowering" is apparently different than mine.

Friedman resurrects the old "if we can land men on the moon, why can't we ....?" line of argument. He wants to launch an "Apollo program" of "nation-building at home". That gets back to the issue of what the necessary functions of government are. Spending on the Apollo moon-landing program was controversial, but I would argue that it was a necessary component of our Cold War military spending. That doesn't mean we should similarly have the federal government spend large amounts of money on things that are better handled in the private sector.

I was one of those "Republican business types" whom Friedman identifies as having voted for Obama (but it's not true that I had "never voted for a Democrat" in my life). I wasn't looking for an expansion of government. On the contrary, I voted against John McCain because I feared he would continue the program of government expansion on which he and his fellow Republicans had embarked, earlier in the decade. I believed that some time in the wilderness would bring the Republican Party back to its traditional advocacy of smaller government.

That strategy seems to be working. Representative Paul Ryan, Republican of Wisconsin, with his "Roadmap for America's Future" has a plan to get entitlement spending under control, and otherwise restrain the growth of federal spending and taxation, while still providing health care and other benefits to those who need them. I prefer that, as an alternative to Friedman's hope that Obama can better package his agenda.

1 comment:

Anonymous said...

Mr. Friedman is a academic knucklehead of the worst variety: one who actually believes what he says.

Mr. Obama ran as a centrist and has turned out to be anything but that. Far from being post-partisan, he is ultra partisan and that unwillingness to work with centrists and member of the right will cost the Dems the independents come November.

I have little concern about Mr. Friedman's ability to see life as it truly is.