Sunday, July 22, 2012

Who is for growth?

This weekend, a prominent columnist delivered some brilliant advice to a presidential candidate:
...make America the launching pad where everyone everywhere should want to come to launch their own moon shot, their own start-up, their own social movement. We can’t stimulate or tax-cut our way to growth. We have to invent our way there....
...we should aspire to be the world’s best launching pad because our work force is so productive; our markets the freest and most trusted; our infrastructure and Internet bandwidth the most advanced; our openness to foreign talent second to none; our funding for basic research the most generous; our rule of law, patent protection and investment-friendly tax code the envy of the world; our education system unrivaled; our currency and interest rates the most stable; our environment the most pristine; our health care system the most efficient; and our energy supplies the most secure, clean and cost-effective.

No, we are not all those things today...
Ok, quiz time. Is this
  1. Some zany free-marketer pushing the Romney campaign to give some teeth to its "pro-growth" rhetoric?
  2.  Advice to Ron Paul on a speech to rouse the Republican convention?
  3. Thomas Friedman, New York Times columnist extraordinaire, in its Sunday pages advising the Obama campaign?
 Amazingly, C. The preamble was
Is there an integrated set of policies, and a narrative, that could animate, inspire and tie together an Obama second term? I think there is.... Obama should aspire to make America the launching pad..
Which gives me hope. Friedman is obviously much better connected than I. If he thinks there is even a ghost of a chance that the Obama campaign would adopt such a strategy, or that the administration would follow anything vaguely like this policy, that is tremendously good news. I thought these sorts of positions, while  middle-of-the-road growth economics, were, in the political sphere, too wildly free-market to hope for from the Romney campaign.

Think of what they mean.
  • "We can’t stimulate our way to growth" is a remarkable admission for anyone in the New York Times orbit. Ok, it included "or tax cut," but an "investment-friendly tax code" has to mean low marginal rates on investment, which means low marginal rates on investment income. No way around it, lower marginal rates, broaden the base.
  • "Our currency and interest rates the most stable" means likewise abandoning hope that endless rounds of Fed "stimulus" or devaluation as the key to success. Both statements are a repudiation of discretionary shoot-from-the-hip macroeconomic policy.
  • A "productive" work force is not composed of protected unions and government workers, on federal boondoggle contracts.  
  • "Openness to foreign talent" means we have to let people in. 
  • "Rule of law" means that health, energy and financial regulation cannot be run by powerful regulators and their crony-capitalist protected industries.
  • All of Friedman's startups succeed by undercutting and putting out of business old ossified but politically well connected companies, yes creating net new jobs but destroying a lot of old ones in the process. 
  • If you've been reading this blog at all, you know  the likelihood that the current health care law and expansion of medicare will deliver anything like "efficiency."
These are radical views indeed. Congratulations to Friedman for stating them, and I hope his friends at the campaign are listening. A Nixon-to-China moment would certainly be refreshing.

(OK, but the moon shot analogy is just weird. What does spending about 3 percent of GDP to send two guys to the moon have to do with unleashing the innovation of thousands of new entrepreneurs? )