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.
Showing posts with label Tom Friedman. Show all posts
Showing posts with label Tom Friedman. Show all posts
Tuesday, February 23, 2010
Thursday, February 18, 2010
30 Years Ago 8: More Geopolitics
Tom Friedman, in his February 14 column in The New York Times, addresses a point I mentioned here, which is the contrast between the events of 20 years ago, centering around the fall of the Berlin Wall on November 9, 1989, and the events of 30 years ago, such as the hostage-taking in Iran and the Soviet invasion of Afghanistan.
I decided that I prefer to write about hockey 30 years ago, rather than geopolitics. But, as I noted here, the two are not totally separate issues. The performance of the U.S. hockey team at the 1980 Winter Olympics took on high symbolic importance in the context of the dark world scene that prevailed at that time.
One comment about the specifics of Friedman's article: He criticizes Ronald Reagan by writing that "Reagan glorified the Afghan mujahedeen" [Muslim militants who fought against the Soviets in Afghanistan]. It is correct that Reagan did so, and that that laid the groundwork for networks of Islamist terrorists, including Osama Bin-Laden, to subsequently attack the U.S. and other Western countries. However, two caveats need to be mentioned:
First, American support for the majahedeen was initiated by Jimmy Carter's administration. There is a marvelous piece of video in the CNN miniseries "The Cold War", showing Carter's national security adviser, Zbigniew Brzezinski, looking almost James Bond-like as he exhorts the Muslim fighters to resist the Soviet invasion. Carter, who, as he began his presidency with naive idealism, thought he could negotiate our way out of the Cold War, had, by 1979, belatedly come around to the view that the Cold War was a real war, and that he needed to fight it.
Second, even if we had better appreciated at the time the long-term consequences, I don't see how we could have avoided siding with the mujahedeen. "The enemy of my enemy is my friend" scenarios have repeatedly caused dilemmas for American foreign policy.
A prime example from a bit further back in history is our alliance with Stalin against Hitler during World War II. Many people (especially those on the left) justify that with the notion that Hitler was a uniquely evil tyrant that needed to be stopped at all costs. In this post, I expressed my disagreement with that point of view. A case can be made that Stalin was a worse tyrant than Hitler, but Hitler was more ruthlessly aggressive against other countries, so I agree that our distasteful alliance with Stalin was necessary.
Similarly, I consider the Soviet Union to have represented the greater evil in 1979, and therefore the U.S. needed to construct the necessary alliances to contain Soviet expansionism.
Let's hope that Friedman's dream of returning to the optimistic atmosphere of 1977, after the influence of Egyptian President Gamal Abdel Nasser and Soviet Communist leader Leonid Brezhnev had been eliminated from the Middle East, and when Nasser's successor Anwar al Sadat was willing to go to Jerusalem for a summit meeting with Israeli leaders, can be realized.
I decided that I prefer to write about hockey 30 years ago, rather than geopolitics. But, as I noted here, the two are not totally separate issues. The performance of the U.S. hockey team at the 1980 Winter Olympics took on high symbolic importance in the context of the dark world scene that prevailed at that time.
One comment about the specifics of Friedman's article: He criticizes Ronald Reagan by writing that "Reagan glorified the Afghan mujahedeen" [Muslim militants who fought against the Soviets in Afghanistan]. It is correct that Reagan did so, and that that laid the groundwork for networks of Islamist terrorists, including Osama Bin-Laden, to subsequently attack the U.S. and other Western countries. However, two caveats need to be mentioned:
First, American support for the majahedeen was initiated by Jimmy Carter's administration. There is a marvelous piece of video in the CNN miniseries "The Cold War", showing Carter's national security adviser, Zbigniew Brzezinski, looking almost James Bond-like as he exhorts the Muslim fighters to resist the Soviet invasion. Carter, who, as he began his presidency with naive idealism, thought he could negotiate our way out of the Cold War, had, by 1979, belatedly come around to the view that the Cold War was a real war, and that he needed to fight it.
Second, even if we had better appreciated at the time the long-term consequences, I don't see how we could have avoided siding with the mujahedeen. "The enemy of my enemy is my friend" scenarios have repeatedly caused dilemmas for American foreign policy.
A prime example from a bit further back in history is our alliance with Stalin against Hitler during World War II. Many people (especially those on the left) justify that with the notion that Hitler was a uniquely evil tyrant that needed to be stopped at all costs. In this post, I expressed my disagreement with that point of view. A case can be made that Stalin was a worse tyrant than Hitler, but Hitler was more ruthlessly aggressive against other countries, so I agree that our distasteful alliance with Stalin was necessary.
Similarly, I consider the Soviet Union to have represented the greater evil in 1979, and therefore the U.S. needed to construct the necessary alliances to contain Soviet expansionism.
Let's hope that Friedman's dream of returning to the optimistic atmosphere of 1977, after the influence of Egyptian President Gamal Abdel Nasser and Soviet Communist leader Leonid Brezhnev had been eliminated from the Middle East, and when Nasser's successor Anwar al Sadat was willing to go to Jerusalem for a summit meeting with Israeli leaders, can be realized.
Friday, January 15, 2010
Tom Friedman 2: Information
Now for the other issue to which I alluded in this post: the Chinese government's restrictions on the flow of information.
The biggest current story on that topic is the threat by the company that hosts this blog, to withdraw from China. Google says it will shut down its Chinese operations, unless it is able to offer uncensored search results in that country.
The New York Times praised Google, and criticized China, in this January 14 editorial. However, on the previous day, that newspaper's foreign affairs columnist, Tom Friedman, had nary a word to say about censorship, while discussing the factors that will affect China's economic future.
Perhaps some might quibble about whether information will be important to the development of China's business, science and politics (although I don't see how). But Friedman doesn't even deem it worth mentioning.
The closest Friedman comes to addressing the issue of the flow of information is when he praises China for having 200,000,000 broadband Internet users, as compared to the U.S.'s mere 80,000,000. But he doesn't mention the fact that those Chinese surfers of the 'net can only receive information that gets through The Great Firewall of China.
Perhaps Friedman thinks that the Chinese should just listen to their political leaders and follow what they say. If the millions of starvation victims for whom Mao's Great Leap Forward was a Great Leap Into The Grave were around to express an opinion, they would probably warn Tom off that mode of thinking.
The biggest current story on that topic is the threat by the company that hosts this blog, to withdraw from China. Google says it will shut down its Chinese operations, unless it is able to offer uncensored search results in that country.
The New York Times praised Google, and criticized China, in this January 14 editorial. However, on the previous day, that newspaper's foreign affairs columnist, Tom Friedman, had nary a word to say about censorship, while discussing the factors that will affect China's economic future.
Perhaps some might quibble about whether information will be important to the development of China's business, science and politics (although I don't see how). But Friedman doesn't even deem it worth mentioning.
The closest Friedman comes to addressing the issue of the flow of information is when he praises China for having 200,000,000 broadband Internet users, as compared to the U.S.'s mere 80,000,000. But he doesn't mention the fact that those Chinese surfers of the 'net can only receive information that gets through The Great Firewall of China.
Perhaps Friedman thinks that the Chinese should just listen to their political leaders and follow what they say. If the millions of starvation victims for whom Mao's Great Leap Forward was a Great Leap Into The Grave were around to express an opinion, they would probably warn Tom off that mode of thinking.
Thursday, January 14, 2010
Tom Friedman
New York Times columnist Tom Friedman is a democrat (as well as being a Democrat) and (to a large extent) an advocate for free-market economics. But he sometimes seems ambivalent about letting individual buyers and sellers in the marketplace, and the rank and file in the body politic, make decisions for themselves.
Friedman makes two major points in his January 13 column, "Is China the Next Enron?" The first is that, despite signs of potential "bubbles" in its economy, China is too financially strong to be on the verge of collapse. The second is that the economic growth that China has been experiencing pretty much non-stop since the late 1970s is likely to continue.
I agree with him on the first point. On the second point, however, Friedman ignores certain aspects of the situation that might restrict China's growth down the road.
Friedman lauds China's "political class focused on addressing its real problems". In other words, the politicians are going to make decisions that will produce continued growth. Color me skeptical.
To his credit, Friedman cites legitimate government functions that are necessary to the growth of any economy, such as transportation infrastructure and education. But he ignores the issue of whether governmental restrictions on access to capital, and the flow of information, will be a drag on growth, long before China might overtake the U.S. in overall size of its economy, which would, in turn, be long before it could overtake on a per capita basis.
The beginnings of Chinese economic growth came in the late 1970s, when that country gradually began to allow markets to operate in its economy. Once that happened, it was not particularly difficult to put up impressive numbers in terms of percentage growth, given the small base they were starting from. Compared to Mao's regime, which was so paranoid about giving up control of anything, that it didn't allow markets for food to operate, even when tens of millions of people were starving to death, anything was an improvement.
The Marxist-Leninist command economy has been replaced by free markets in the distribution of consumer goods. And, to an increasing extent, capital is also allocated by market forces. Of all the recent changes in China, the existence of stock markets is perhaps the element most likely to make Mao turn over in his grave.
But significant vestiges of the command economy remain in the allocation of capital. Banks are pressured to lend to politically-preferred borrowers. And political infringements on property rights still impair the workings of the capital markets.
Friedman is probably correct in stating that China's current leaders are making some good decisions. But no one is smarter than the market. Political decisions are necessary on issues such as antitrust, externalities and fraud. But, otherwise, freely operating markets are much better at allocating resources than are central planners. I suspect that the Chinese will eventually find that growth can go only so far, without better capital allocation.
And then there is, of course, the pink elephant in the room that many don't want to talk about: the virtually complete lack of democracy in Chinese politics. That has many implications. But, in terms of the practical effect on the efficiency of the system, they are missing the capacity of democratic political activity to correct mistakes.
No one here in America will say that representative democracy is perfect. Throughout our history, it could be said, in the famously vague phrase of Richard Nixon's press secretary Ron Ziegler, that "mistakes were made".
But representative democracy provides mechanisms for correcting mistakes. An opposition party has the incentive and the forum to point out the mistakes of the governing party. If the electorate agrees with those criticisms, it can "throw the rascals out".
In China, by contrast, the leaders talk to each other in an echo chamber, and appoint their own successors. A reputation for "rocking the boat" constitutes the biggest danger to a Chinese politician's career path. So there is little incentive for an aspiring politician to point up the shortcomings of those who are currently in power.
Friedman likes to present himself as an average guy, good ol' Tom from St. Louis Park, Minnesota. But he displays some strongly elitist attitudes in his writing. He often underestimates the importance of giving ordinary people their say, both in the marketplace and in the political realm.
Friedman makes two major points in his January 13 column, "Is China the Next Enron?" The first is that, despite signs of potential "bubbles" in its economy, China is too financially strong to be on the verge of collapse. The second is that the economic growth that China has been experiencing pretty much non-stop since the late 1970s is likely to continue.
I agree with him on the first point. On the second point, however, Friedman ignores certain aspects of the situation that might restrict China's growth down the road.
Friedman lauds China's "political class focused on addressing its real problems". In other words, the politicians are going to make decisions that will produce continued growth. Color me skeptical.
To his credit, Friedman cites legitimate government functions that are necessary to the growth of any economy, such as transportation infrastructure and education. But he ignores the issue of whether governmental restrictions on access to capital, and the flow of information, will be a drag on growth, long before China might overtake the U.S. in overall size of its economy, which would, in turn, be long before it could overtake on a per capita basis.
The beginnings of Chinese economic growth came in the late 1970s, when that country gradually began to allow markets to operate in its economy. Once that happened, it was not particularly difficult to put up impressive numbers in terms of percentage growth, given the small base they were starting from. Compared to Mao's regime, which was so paranoid about giving up control of anything, that it didn't allow markets for food to operate, even when tens of millions of people were starving to death, anything was an improvement.
The Marxist-Leninist command economy has been replaced by free markets in the distribution of consumer goods. And, to an increasing extent, capital is also allocated by market forces. Of all the recent changes in China, the existence of stock markets is perhaps the element most likely to make Mao turn over in his grave.
But significant vestiges of the command economy remain in the allocation of capital. Banks are pressured to lend to politically-preferred borrowers. And political infringements on property rights still impair the workings of the capital markets.
Friedman is probably correct in stating that China's current leaders are making some good decisions. But no one is smarter than the market. Political decisions are necessary on issues such as antitrust, externalities and fraud. But, otherwise, freely operating markets are much better at allocating resources than are central planners. I suspect that the Chinese will eventually find that growth can go only so far, without better capital allocation.
And then there is, of course, the pink elephant in the room that many don't want to talk about: the virtually complete lack of democracy in Chinese politics. That has many implications. But, in terms of the practical effect on the efficiency of the system, they are missing the capacity of democratic political activity to correct mistakes.
No one here in America will say that representative democracy is perfect. Throughout our history, it could be said, in the famously vague phrase of Richard Nixon's press secretary Ron Ziegler, that "mistakes were made".
But representative democracy provides mechanisms for correcting mistakes. An opposition party has the incentive and the forum to point out the mistakes of the governing party. If the electorate agrees with those criticisms, it can "throw the rascals out".
In China, by contrast, the leaders talk to each other in an echo chamber, and appoint their own successors. A reputation for "rocking the boat" constitutes the biggest danger to a Chinese politician's career path. So there is little incentive for an aspiring politician to point up the shortcomings of those who are currently in power.
Friedman likes to present himself as an average guy, good ol' Tom from St. Louis Park, Minnesota. But he displays some strongly elitist attitudes in his writing. He often underestimates the importance of giving ordinary people their say, both in the marketplace and in the political realm.
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