This is another post inspired by a week of work related events. In this case I spent the day conducting surveys at a self-advocacy conference as part of our planning process. Something that struck me was how often it was mentioned that people had to be more kind and understanding or something else about how people had to change. This of course isn't something that is easily fixed by policy, people are what they are. After this first, impossible, request however, they often got into particulars where we could put in some work and effort to make a real difference.
Being always obsessed with national and international politics I couldn't help but think that this is basically the exact same thing that people keep saying we need to do to make politics work better. I keep hearing that all we need is for people to be better, more personally responsible, more involved, more giving, etc. Here's where I think people with disabilities tend to be wiser. They don't think there's some simple fix to this, people are what they are and it's hard to change. They realize that changing minds and attitudes takes hard work and that to work at all it has to start early and continue for a long time. They also realize that many people don't naturally possess the skills they need to be successful, learning these skills takes hard work and effort and won't happen on its own if we step back.
I think there are a few different things that make attitudes different. No one is writing books justifying the prejudices of people with disabilities, they learn early that there are all kinds of people in this world and everyone won't magically start behaving how they would like others to. They don't have the luxury of cocooning themselves in environments where the world seems to do nothing but confirm their worldview and condemn that of others. They also learn how much of a difference the right kinds of interventions can make. They get to see up close what happens when something works and what happens when something doesn't, so they often have strong opinions on exactly what they see happening, rather than based on some vague theory they heard on the radio or read in a book once.
I find this attitude to be generally better for actually making change happen. No one is pretending that just changing faces is the critical element, this has happened too often to no avail. People need to learn to think differently and the environment needs to change to make this new thinking possible. This takes time, it takes education, it takes broad change in many areas, and there are no simple fixes. Blaming our problems on others doesn't help, there are all sorts of people, some of them difficult to work with, and this won't ever change. The problem isn't making the problem people go away but instead building systems that can include everyone as they are since there is no way of making people into what we want them to be. Learn to build with what we have rather than thinking you can fix people. People don't need to be fixed and you can't punish or reward them into become the people you want them to be. You can change the systems within which they live their lives so that everyone can be the most they can be however.
Friday, October 29, 2010
Thursday, October 28, 2010
Why Cost Cutting Costs Money
My last post went on a little too long for this related idea to make it in.
A second problem resulting in big, expensive government is that constant demands for cost cutting prohibits government from making the necessary investments to save money in the longer run. We're* constantly besieged by calls to save money. From those that rely on our services, it's also constantly demanded that we do more.
What this results in is that all of our money ends up being dedicated to the direct provision of whatever it is we're required to do. Sounds great, right? Well, in practice this means that we're short shifting training, capital investments, and just about everything else that won't result in angry letters to legislators about our failings.
Of course, this costs money in the long run. Computers don't get upgraded, far too many offices are relying on antiquated machinery and legacy software. This means that over time it gets more difficult to share information and to use lower cost ways to communicate. Training doesn't get finished meaning we can't keep up with best practices. Basic infrastructure falls apart and costs more to fix later than if we had done it on schedule. We're in constant crisis control mode meaning its hard to build for the future.
But go on, keep demanding that we somehow find savings. Then wonder why everything seems to simultaneously get worse while costing more just to keep running. If you don't maintain things properly, and pay for it to be done properly, you always end up with a higher bill down the line. Giving some money to actually invest, and letting us know this will be available when necessary,** will go a long way to both shrinking government and making it more efficient in the long run.
* Favored bureaucracies, like the military, don't really have this problem and can be pretty profligate. This is the exception, not the rule.
**Because of these pressures to save money you get an unfortunate situation where when we do get an increase in funding to do needed upgrades and maintenance we're very tenacious about keeping that money, even when the work gets done. There's a lot of reasons for this, but a big one is that we know how hard it is to get a needed increase so we'd rather have more resources than we need than not have the resources we need when we need it. If we could be reasonably sure that needed funding increases would be approved for maintenance or upgrading these pressures would be much less.
A second problem resulting in big, expensive government is that constant demands for cost cutting prohibits government from making the necessary investments to save money in the longer run. We're* constantly besieged by calls to save money. From those that rely on our services, it's also constantly demanded that we do more.
What this results in is that all of our money ends up being dedicated to the direct provision of whatever it is we're required to do. Sounds great, right? Well, in practice this means that we're short shifting training, capital investments, and just about everything else that won't result in angry letters to legislators about our failings.
Of course, this costs money in the long run. Computers don't get upgraded, far too many offices are relying on antiquated machinery and legacy software. This means that over time it gets more difficult to share information and to use lower cost ways to communicate. Training doesn't get finished meaning we can't keep up with best practices. Basic infrastructure falls apart and costs more to fix later than if we had done it on schedule. We're in constant crisis control mode meaning its hard to build for the future.
But go on, keep demanding that we somehow find savings. Then wonder why everything seems to simultaneously get worse while costing more just to keep running. If you don't maintain things properly, and pay for it to be done properly, you always end up with a higher bill down the line. Giving some money to actually invest, and letting us know this will be available when necessary,** will go a long way to both shrinking government and making it more efficient in the long run.
* Favored bureaucracies, like the military, don't really have this problem and can be pretty profligate. This is the exception, not the rule.
**Because of these pressures to save money you get an unfortunate situation where when we do get an increase in funding to do needed upgrades and maintenance we're very tenacious about keeping that money, even when the work gets done. There's a lot of reasons for this, but a big one is that we know how hard it is to get a needed increase so we'd rather have more resources than we need than not have the resources we need when we need it. If we could be reasonably sure that needed funding increases would be approved for maintenance or upgrading these pressures would be much less.
Small Government for Bureaucrats
I had meant to get off the topic of small government for other subjects but a week of business related events and meetings has left me with some thoughts on small government from the perspective of the bureaucracy.
We see the inefficiencies of government up close, and to us these inefficiencies look radically different than they do to the public at large. While the public rants about waste, fraud, and abuse we see up close that the waste is the result of the witch hunt for fraud and abuse and the completely insane level of accountability required by this accountability.
From my experiences in both the lower rungs of private industry and the public sector I am amazed on a daily basis how much effort is put in by the public sector in trying to eliminate what the private sector writes off as shrinkage without a second thought. But we can't avoid this, we can't simply give an expense account to an employee while traveling for fear that its use might be misinterpreted. Every penny spent must be documented and looked over by what seems an infinite number of eyes. It's insane, we know, but live in constant fear of a public obsessed by fraud and abuse so are terrified that an employee at a conference might be seen in a bar with friends from the area afterward. This kind of nonsense just doesn't exist in the private sector and it only exists in the public sector because the public demands impossible to fulfill expectations and has been convinced that rampant abuse exists by those that politically benefit. The truth is that we live on a leash that is virtually strangling us and that anyone with experience in the private sector knows is counter-productive and wastes heaps of public money eliminating a tiny fraction of fraud that is a natural part of any human organization. This is the dirty secret of government that no politician, or bureaucrat for that matter, is willing to admit to publicly (and I probably wouldn't either if this blog weren't anonymous, you don't say this kind of thing), government waste and byzantine rules is largely the result of the hunt for fraud and abuse. Use sensible rules like private industry would and government would rapidly become more efficient.
Another dirty secret no public official wants to admit to is that a great deal of inefficiency is due to antiquated legislation. But heaven forbid that our enabling laws ever get brought up again for renewal, the public is protesting in favor of 18th century legislation not demanding new legislation so that we can start running things like we're actually in the 21st century instead of some timeless limbo where laws are based on Platonic principles. There's an endless stream of commonsense stuff that we just can't do because we're trying to act within legislation and accountability procedures that are decades old. What is obvious to do today didn't even exist when the laws we're accountable to were written. We're trying to implement laws that make no sense in the modern context and waste incredible amounts of time trying to make something that would actually work today be defensible in legal terms that were written when mainframe was synonymous with computer, and for some agencies (not ours, thankfully) enabling legislation that may be older than this.
Unsurprisingly, between these two factors we get byzantine, incomprehensible procedures that lead to massive inefficiency. We know what the public is demanding, and after we finish arguing back that we can't do whatever commonsense thing that you're suggesting, we go back and bitch to our colleagues how stupid it is that we can't do it. We know perfectly well that a well placed few thousand dollars, and in extreme cases maybe a well placed $20, could save the state tens of thousands but we have accountability procedures that prefer that tens of thousands be wasted above board rather than a few hundred being spent that might sometimes be diverted to fraud, even if no where near often enough to equal that tens of thousands. And guess what, we know from experience that we'll get nothing for saving that tens of thousands of dollars and will get punished very heavily for a few hundred that instead goes towards a scam.
The problem lies in a public that is so hostile to government that sensible reform becomes impossible and that we have to continually make major exertions to prevent even the semblance of fraud or abuse. Another problem is a public that demands that those working in government be angels, rather than human beings. We can legitimately be held to somewhat higher standards than the private sector but with anything there are diminishing returns, there will always be some fraud and abuse and once it's low enough eliminating each additional increment is prohibitively expensive. We're deep into that expense today. Combine this with the ideal type of government based on eternal principles, rather than a continuously evolving social entity needing renewal for our rapidly changing social conditions, and you get a dysfunctional system constantly trying to retrofit completely obsolete legislation to get tasks done that were inconceivable when it was written. The lack of trust in government, and the lack of demand for modern government, rather than government from an ideal past, promises that government will be big and bloated. It has to be to make the ancient machinery work.
We see the inefficiencies of government up close, and to us these inefficiencies look radically different than they do to the public at large. While the public rants about waste, fraud, and abuse we see up close that the waste is the result of the witch hunt for fraud and abuse and the completely insane level of accountability required by this accountability.
From my experiences in both the lower rungs of private industry and the public sector I am amazed on a daily basis how much effort is put in by the public sector in trying to eliminate what the private sector writes off as shrinkage without a second thought. But we can't avoid this, we can't simply give an expense account to an employee while traveling for fear that its use might be misinterpreted. Every penny spent must be documented and looked over by what seems an infinite number of eyes. It's insane, we know, but live in constant fear of a public obsessed by fraud and abuse so are terrified that an employee at a conference might be seen in a bar with friends from the area afterward. This kind of nonsense just doesn't exist in the private sector and it only exists in the public sector because the public demands impossible to fulfill expectations and has been convinced that rampant abuse exists by those that politically benefit. The truth is that we live on a leash that is virtually strangling us and that anyone with experience in the private sector knows is counter-productive and wastes heaps of public money eliminating a tiny fraction of fraud that is a natural part of any human organization. This is the dirty secret of government that no politician, or bureaucrat for that matter, is willing to admit to publicly (and I probably wouldn't either if this blog weren't anonymous, you don't say this kind of thing), government waste and byzantine rules is largely the result of the hunt for fraud and abuse. Use sensible rules like private industry would and government would rapidly become more efficient.
Another dirty secret no public official wants to admit to is that a great deal of inefficiency is due to antiquated legislation. But heaven forbid that our enabling laws ever get brought up again for renewal, the public is protesting in favor of 18th century legislation not demanding new legislation so that we can start running things like we're actually in the 21st century instead of some timeless limbo where laws are based on Platonic principles. There's an endless stream of commonsense stuff that we just can't do because we're trying to act within legislation and accountability procedures that are decades old. What is obvious to do today didn't even exist when the laws we're accountable to were written. We're trying to implement laws that make no sense in the modern context and waste incredible amounts of time trying to make something that would actually work today be defensible in legal terms that were written when mainframe was synonymous with computer, and for some agencies (not ours, thankfully) enabling legislation that may be older than this.
Unsurprisingly, between these two factors we get byzantine, incomprehensible procedures that lead to massive inefficiency. We know what the public is demanding, and after we finish arguing back that we can't do whatever commonsense thing that you're suggesting, we go back and bitch to our colleagues how stupid it is that we can't do it. We know perfectly well that a well placed few thousand dollars, and in extreme cases maybe a well placed $20, could save the state tens of thousands but we have accountability procedures that prefer that tens of thousands be wasted above board rather than a few hundred being spent that might sometimes be diverted to fraud, even if no where near often enough to equal that tens of thousands. And guess what, we know from experience that we'll get nothing for saving that tens of thousands of dollars and will get punished very heavily for a few hundred that instead goes towards a scam.
The problem lies in a public that is so hostile to government that sensible reform becomes impossible and that we have to continually make major exertions to prevent even the semblance of fraud or abuse. Another problem is a public that demands that those working in government be angels, rather than human beings. We can legitimately be held to somewhat higher standards than the private sector but with anything there are diminishing returns, there will always be some fraud and abuse and once it's low enough eliminating each additional increment is prohibitively expensive. We're deep into that expense today. Combine this with the ideal type of government based on eternal principles, rather than a continuously evolving social entity needing renewal for our rapidly changing social conditions, and you get a dysfunctional system constantly trying to retrofit completely obsolete legislation to get tasks done that were inconceivable when it was written. The lack of trust in government, and the lack of demand for modern government, rather than government from an ideal past, promises that government will be big and bloated. It has to be to make the ancient machinery work.
Wednesday, October 27, 2010
Small Government Part 2
Overnight an easier way of writing about this occurred to me. This could probably replace my earlier, somewhat messier, post but I figure I'll just leave both up since I already wrote it.
The idea of small government is used to hold several concepts, and to express several fears, that are often contradictory. On its own, the concept has grown so much that it is entirely useless and cannot be meaningfully used in a policy context because it is impossible to tell what exactly it is that people are asking for when they use it. Separating out the components gives us some meaningful traction.
The idea of small government is used to hold several concepts, and to express several fears, that are often contradictory. On its own, the concept has grown so much that it is entirely useless and cannot be meaningfully used in a policy context because it is impossible to tell what exactly it is that people are asking for when they use it. Separating out the components gives us some meaningful traction.
- Local government as opposed to centralized government. Small government is often used to argue that government should be closer to the people whenever possible.
- Government as opposed to private sector. This focuses on competition between the private sector and government for resources. Two things are worth mentioning here. You have to take transfer payments out for this conception to make sense, the government gets nothing for these transfers so it is not meaningfully competing for resources here, the competition is between those that receive transfers and those who don't, not the private sector and government. The second is that I think this rests on an idea of substitutabilty that I don't think is actually present and resource constraints that aren't as extreme as this concept holds. It makes sense at extremes but I think to a fairly large extent government employs people that find public work more congenial and will do better work than they will in the private sector. There is some competition but I think this view ignores that people are sufficiently different that the more different kinds of structure we have to employ people usefully the more we can maximize people's potential contributions.
- Government's power relative to other entities. This is probably the least frequently mentioned and the one that worries me the most. This is the government's ability to compel behavior through powerful police forces, complex regulations, and the military. This can be decreased through laws restricting the use of wiretapping, creation of oversight bodies, etc. It is generally increased by reducing the amount of laws restricting government.
- Government as a burden. This is the extent to which people experience the presence of government in tangible ways (not as background) in their daily lives. Things like the burden of filling out tax forms, regulatory burdens if you want to start a new business, the number of times you have to fill out the same forms when you move (think DMV, voter registration, changing your address with the post office), etc. These things are what makes government feel like a repressive burden. Solving these issues are often opposed by opponents of other forms of big government, a centralized database would solve a lot of paperwork issues, a more streamlined tax system would make government seem less invasive (which is a problem for those concerned about government as % of GDP), more centralization in general would make interactions with various jurisdictions easier (think of the pain of getting a speeding ticket out of town, if this was centralized there would be less need to interact with the local court).
Tuesday, October 26, 2010
Small Government, What Does It Mean?
Small government is a very important idea in American politics. I'll confess it's an idea that I don't much care for since I believe it provides no meaningful information in its most common conceptions and is based on a poor understanding of how social institutions operate, I prefer sector by sector breakdowns by percentage of GDP and then simply asking if we're using the correct institutions to provide these things or are the institutions we're using inefficient (so for example, we could ask if we're providing enough poor relief, if not, if the mix of private, public, government, and other institutions is supplying the right mix of resources and then trying to get the expenditure right as a % of GDP; I think it's misleading to worry if this aid is being supplied by private companies, non-profits, organizations such as the Catholic Church, or government, it's which does it best that matters).
Still, I realize that this is an important concept and needs some exploration. When people talk about small government my observation is that they in fact mean several different things by the term, several of them contradictory. Some of these distinctions I do find meaningful, it's the overall concept that I find problematic.
A secondary point is that I don't really think entitlement payments are meaningful when discussing government size. They have nothing to do with the scope or power of the government nor do they effect the relative powers of federal vs. local government. Since the government is obligated to pay these out it can't use existing payments to buy votes nor can it meaningfully withhold them to increase its power. Overseeing these funds aren't particularly large as drivers of direct government employment (except the VA which is a special case) so don't much impact other measures of the size of government. Entitlements are best thought of as an entirely separate area that doesn't have a meaningful impact on the size of government since they are simply funds that pass through government with little overhead. The big difference between these expenditures and other expenditures is the government has no discretion over them and doesn't actually spend the funds, any more than your insurance company spends its money when paying you a claim. It's a liability but one so tightly bounded by contract that it provides no meaningful power. If you're still doubting this, think if it would be meaningfully different if we instead gave this portion of our taxes to the Catholic Church or a private for profit company for later distribution. While I can't say there would be no differences, I don't think there would be many. A separate discussion can of course be had specific to entitlements, and should, but this should not get complicated by discussions of government size or power that are not relevant to the subject.
[Edit: An overview of the academic literature on the subject is available at the St. Louis Fed This unsurprisingly differs from what I said above. I think separating out transfers are important mostly because transfers do little to increase the power or influence of government and should be separated out from the concepts of power and influence that seem to be behind the anxiety people feel to a large and strong government. Conflating these issues, as small government rhetoric always does, just confuses the situation and makes having a rational conversation about either government size and power or entitlements impossible.]
Still, I realize that this is an important concept and needs some exploration. When people talk about small government my observation is that they in fact mean several different things by the term, several of them contradictory. Some of these distinctions I do find meaningful, it's the overall concept that I find problematic.
- The most common concept of government size is how much government is spending as a % of GDP. It's easy, clear, and marketable. It's also entirely meaningless. There's a big difference between government spending that is transfer payments and government spending that is leading to employment by the government or the acquisition of capital by the government. Government spending is also dependent on the basket of goods demanded by the populace, in wartime conditions for instance government spending as % of GDP will soar without necessarily leading to long term social and economic changes as a result of this spending (it may, but there are better places to look for this than share of GDP). While there are some academic cases where this may be a useful value for large N studies, as far as actual policymaking is concerned there is always a better, and almost as easy, way of conceiving of the government's size than headline GDP.
- The second most common way I see size of government used is as a form of shorthand for arguments for decentralization. This is a perfectly sensible critique, one I rarely agree with but entirely respect. It is also somewhat contradictory with the first concept of government size since decentralized government is usually more expensive since it tends to replicate necessary functions across multiple jurisdictions that could instead be centralized. This has its benefits and drawbacks. I tend to feel that in many cases we're better off more centralized since it is more important to ease factor mobility (or in less academic terms, make it easy for someone to pick up and move and possibly start up a new business without running into unexpected differences in things like business laws, health insurance, government services, etc.) than it is to protect local differences but acknowledge that on this factor the arguments are equally strong on both sides and this is solely a matter of preference and uncertain projections of future conditions. (This subject may be worth a full post on later)
- Another, somewhat less frequent way of conceiving of government size is to look at the government workforce, and to a lesser extent, government capital holdings. I don't have strong opinions on this subject but I do see a lot of sense in conceiving of government size in the terms of people employed and government owned land and capital. There are sensible arguments to be made that we don't want too much of our labor force to be government employees. This can also contradict #2, shrinking the government workforce can often be achieved by consolidating jurisdictions and unifying and streamlining agencies. [Governments expenditures less entitlements is another, and better, way of looking at this. I see number of government employees separated out a lot rhetorically so thought the messier conception initially given deserved first mention since this is the usual way it comes up]
- Government size can also be conceived of as its ability to compel behavior. This is hard to quantify but is basically the degree to which we adapt our behavior to conform to government mandates. This can be business regulations, actions not taken due to fear of government reprisal (smoking pot, gay people getting married), number of people imprisoned, burden of complying with government mandated activities (auto registration, taxes), etc. This also frequently contradicts conception 2, since more decentralized government is more likely to lead to additional regulatory burden (like replication of documents, need for multiple points of information gathering where a more centralized system could update across multiple agencies and jurisdictions). The size and strength of the military was also historically thought of this way, though that is currently unfashionable.
- There are of course other ways of conceiving of the size of government but most of these are marginal and more for academic purposes. Counting the number of government agencies, or departments, cabinet positions, etc. all have their purposes but aren't terribly enlightening.
A secondary point is that I don't really think entitlement payments are meaningful when discussing government size. They have nothing to do with the scope or power of the government nor do they effect the relative powers of federal vs. local government. Since the government is obligated to pay these out it can't use existing payments to buy votes nor can it meaningfully withhold them to increase its power. Overseeing these funds aren't particularly large as drivers of direct government employment (except the VA which is a special case) so don't much impact other measures of the size of government. Entitlements are best thought of as an entirely separate area that doesn't have a meaningful impact on the size of government since they are simply funds that pass through government with little overhead. The big difference between these expenditures and other expenditures is the government has no discretion over them and doesn't actually spend the funds, any more than your insurance company spends its money when paying you a claim. It's a liability but one so tightly bounded by contract that it provides no meaningful power. If you're still doubting this, think if it would be meaningfully different if we instead gave this portion of our taxes to the Catholic Church or a private for profit company for later distribution. While I can't say there would be no differences, I don't think there would be many. A separate discussion can of course be had specific to entitlements, and should, but this should not get complicated by discussions of government size or power that are not relevant to the subject.
[Edit: An overview of the academic literature on the subject is available at the St. Louis Fed This unsurprisingly differs from what I said above. I think separating out transfers are important mostly because transfers do little to increase the power or influence of government and should be separated out from the concepts of power and influence that seem to be behind the anxiety people feel to a large and strong government. Conflating these issues, as small government rhetoric always does, just confuses the situation and makes having a rational conversation about either government size and power or entitlements impossible.]
Saturday, October 23, 2010
American Success in Perspective
This is back to what I considered the original plan for these posts, start big and start narrowing down to particular issues.
While it is less frequently mentioned today than it was a decade ago, America remains far and away the most powerful country on Earth. Superpower, or even hyperpower, are still used to refer to our relative power position. This isn't inaccurate but, as I do sometimes see implied, this isn't a reason to believe that America's policies have been remarkably better than other countries, or even that it is our policies or institutions that have led us to this power position.
Let's put some perspective on America's rise. The former European powers were all very small. Some of them had large imperial territories but the form of imperialism used to control these far flung territories required substantial resource investments from the home territories to maintain. While this investment often paid off, they were far more intrinsically brittle than societies that could rely on extensive home territories for their power. What they had to rely on was a historically unique confluence of several factors, the modern state, the industrial revolution, nationalism, great demographics, democracy in some cases, and a few other factors I'm probably forgetting. These factors weren't shared by other societies they were competing against, though in situations such as Japan's where some of these factors did arise a competitor was quick to arise, and they were able to exploit the superiority of these developments to gain a historically unique position.
During this phase, the US competed remarkably well. We made mistakes, so did everyone else, but it is hard to say that our 18th and 19th century history isn't remarkable for the balance in favor of achievements over mistakes. During this period, we also successfully expanded to have a land area and population that distinguished us from all the other western powers, though distance prevented this from being decisive in this period. While getting into specifics would take far more time and space then I am prepared to give the subject, in this period I am perfectly willing to endorse the idea that relatively good policies and decisions gave the US a decisive lead over other societies. This extends up till WWII. It is important to remember of course that this success wasn't against some absolute sense of what makes societies successful, it was success against a set of particular competitors that simply made worse decisions than we did.
After WWII is where I think that some perspective on our achievements relative to our power is essential. The European powers had been decisively humbled, the Soviet Union was our only competitor. Let's be honest about this competition though. Only the US and the Soviet Union had the geographic expanse, population, economic development, and diplomatic position (in the form of the Soviet allied Eastern Bloc and US NATO, the presence of both of these organizations is owed to the first three factors however) to be in a competitive position. No other state has been in truly competitive position in the second half of the 20th century. Japan came close, but its limited geographic base is a severe restriction in long term power competition. Other states don't even come close.
What we have to admit to ourselves though, is that we were competing with a state that was operating under a fundamentally flawed political and economic ideology. It had the components it needed to compete but it wasn't using these components in a sensible fashion. Winning the Cold War had two essential victory conditions for the US, not implode and not cause a nuclear war. Only the second of these involved any difficulty, we don't deserve any awards for achieving the first. The Soviet Union was doomed from its inception because it was a society based on a theory, rather than on reality. These always fail given time.
Given this perspective, winning the Cold War has to be seen as not being in any way an endorsement of the American system, it's simply a condemnation of the Soviet one. Our own achievements are harder to assess, we simply don't have any societies worth comparing ourselves to for the past 50 years. I think we have some very good reasons to doubt that we've been making good decisions for the last 40 years or so, not that we didn't make some real doozies before that too, the WWII era decision to put so much of our health insurance benefits in the hands of employers was a bad call with very far reaching effects.
I'll be getting into specific issues, both achievements and flaws in later posts. But when assessing our modern record, it is important to keep in mind the basic disparity we have in natural resources relative to other states. The only state comparable in its resource endowments was held back by an insane ideology, those that were on an equal playing field ideologically and institutionally had far less in the way of natural resources. To say our successes are remarkable because of actions that we took as a state we have to think in terms of relative resource endowments. For instance, the next closest developed nation to ourselves in terms of population is Japan, with about 125 million inhabitants to our close to 300 million. Saying that we have more of the top Nobel prize winners than they do, or top medical specialists, or top universities, or biggest companies isn't at all impressive. With more than twice the population I certainly hope we do. Saying that we have more than 2 1/2 times the number of each of these things, well, that is something to be proud of. But remember, in this large and wealthy of a country saying that we have more of anything isn't something to be proud of, it's to be expected simply by virtue of our size. To say we've been a top performer in our position it takes more than just being the best at something, we have to be the best by quite a large margin. Anything less not only fails the test of American exceptionalism, it fails to recognize the basic facts of our place in the world.
Of course, we also have to recognize this phase of our existence is coming to a close. In a few short decades we won't be competing with countries that we out-compete by default simply by virtue of our size or their insanity. We will be competing against several states that are comparable in size and in the basic components that make up modernity. If we want to be a proud, successful country we need to stop patting ourselves on the back for defeating the feeble and realize we're going to have to work hard and make sacrifices to be competitive. I believe we've been rather self-indulgent over the last 40 years. We've taken the natural results of the size of our population, the richness of our natural resources, the security of our position, and the favorable diplomatic and political environment and mistaken this for a confirmation of the success of our actions and policies. This pleasant environment is ending. Our policies and decisions no longer are being made in a world where we win simply by being who we are, now we're going to have to prove to the world that what we do actually works and we'll have real competitors against which we can be compared. The time where we can simply experiment with policies with little thought to long term consequences is ending, we're going to have to honestly face the results of our policy decisions and make course corrections when things don't play out right. Results must trump ideology or the American superpower will rapidly become a footnote in history. A world where we're competing against real powers in Europe, China, India, and regional power blocs that are likely to form in South America centered on Brazil and possibly in South-East Asia isn't one that we can ignore reality and survive in. We have to pay our debts, do what works, and pay careful attention to adapting ourselves to paying careful attention to the world outside our borders. There's a lot of potential in this world, and I believe it will be a better world, but it's a much more competitive one that won't allow us to be self-indulgent.
While it is less frequently mentioned today than it was a decade ago, America remains far and away the most powerful country on Earth. Superpower, or even hyperpower, are still used to refer to our relative power position. This isn't inaccurate but, as I do sometimes see implied, this isn't a reason to believe that America's policies have been remarkably better than other countries, or even that it is our policies or institutions that have led us to this power position.
Let's put some perspective on America's rise. The former European powers were all very small. Some of them had large imperial territories but the form of imperialism used to control these far flung territories required substantial resource investments from the home territories to maintain. While this investment often paid off, they were far more intrinsically brittle than societies that could rely on extensive home territories for their power. What they had to rely on was a historically unique confluence of several factors, the modern state, the industrial revolution, nationalism, great demographics, democracy in some cases, and a few other factors I'm probably forgetting. These factors weren't shared by other societies they were competing against, though in situations such as Japan's where some of these factors did arise a competitor was quick to arise, and they were able to exploit the superiority of these developments to gain a historically unique position.
During this phase, the US competed remarkably well. We made mistakes, so did everyone else, but it is hard to say that our 18th and 19th century history isn't remarkable for the balance in favor of achievements over mistakes. During this period, we also successfully expanded to have a land area and population that distinguished us from all the other western powers, though distance prevented this from being decisive in this period. While getting into specifics would take far more time and space then I am prepared to give the subject, in this period I am perfectly willing to endorse the idea that relatively good policies and decisions gave the US a decisive lead over other societies. This extends up till WWII. It is important to remember of course that this success wasn't against some absolute sense of what makes societies successful, it was success against a set of particular competitors that simply made worse decisions than we did.
After WWII is where I think that some perspective on our achievements relative to our power is essential. The European powers had been decisively humbled, the Soviet Union was our only competitor. Let's be honest about this competition though. Only the US and the Soviet Union had the geographic expanse, population, economic development, and diplomatic position (in the form of the Soviet allied Eastern Bloc and US NATO, the presence of both of these organizations is owed to the first three factors however) to be in a competitive position. No other state has been in truly competitive position in the second half of the 20th century. Japan came close, but its limited geographic base is a severe restriction in long term power competition. Other states don't even come close.
What we have to admit to ourselves though, is that we were competing with a state that was operating under a fundamentally flawed political and economic ideology. It had the components it needed to compete but it wasn't using these components in a sensible fashion. Winning the Cold War had two essential victory conditions for the US, not implode and not cause a nuclear war. Only the second of these involved any difficulty, we don't deserve any awards for achieving the first. The Soviet Union was doomed from its inception because it was a society based on a theory, rather than on reality. These always fail given time.
Given this perspective, winning the Cold War has to be seen as not being in any way an endorsement of the American system, it's simply a condemnation of the Soviet one. Our own achievements are harder to assess, we simply don't have any societies worth comparing ourselves to for the past 50 years. I think we have some very good reasons to doubt that we've been making good decisions for the last 40 years or so, not that we didn't make some real doozies before that too, the WWII era decision to put so much of our health insurance benefits in the hands of employers was a bad call with very far reaching effects.
I'll be getting into specific issues, both achievements and flaws in later posts. But when assessing our modern record, it is important to keep in mind the basic disparity we have in natural resources relative to other states. The only state comparable in its resource endowments was held back by an insane ideology, those that were on an equal playing field ideologically and institutionally had far less in the way of natural resources. To say our successes are remarkable because of actions that we took as a state we have to think in terms of relative resource endowments. For instance, the next closest developed nation to ourselves in terms of population is Japan, with about 125 million inhabitants to our close to 300 million. Saying that we have more of the top Nobel prize winners than they do, or top medical specialists, or top universities, or biggest companies isn't at all impressive. With more than twice the population I certainly hope we do. Saying that we have more than 2 1/2 times the number of each of these things, well, that is something to be proud of. But remember, in this large and wealthy of a country saying that we have more of anything isn't something to be proud of, it's to be expected simply by virtue of our size. To say we've been a top performer in our position it takes more than just being the best at something, we have to be the best by quite a large margin. Anything less not only fails the test of American exceptionalism, it fails to recognize the basic facts of our place in the world.
Of course, we also have to recognize this phase of our existence is coming to a close. In a few short decades we won't be competing with countries that we out-compete by default simply by virtue of our size or their insanity. We will be competing against several states that are comparable in size and in the basic components that make up modernity. If we want to be a proud, successful country we need to stop patting ourselves on the back for defeating the feeble and realize we're going to have to work hard and make sacrifices to be competitive. I believe we've been rather self-indulgent over the last 40 years. We've taken the natural results of the size of our population, the richness of our natural resources, the security of our position, and the favorable diplomatic and political environment and mistaken this for a confirmation of the success of our actions and policies. This pleasant environment is ending. Our policies and decisions no longer are being made in a world where we win simply by being who we are, now we're going to have to prove to the world that what we do actually works and we'll have real competitors against which we can be compared. The time where we can simply experiment with policies with little thought to long term consequences is ending, we're going to have to honestly face the results of our policy decisions and make course corrections when things don't play out right. Results must trump ideology or the American superpower will rapidly become a footnote in history. A world where we're competing against real powers in Europe, China, India, and regional power blocs that are likely to form in South America centered on Brazil and possibly in South-East Asia isn't one that we can ignore reality and survive in. We have to pay our debts, do what works, and pay careful attention to adapting ourselves to paying careful attention to the world outside our borders. There's a lot of potential in this world, and I believe it will be a better world, but it's a much more competitive one that won't allow us to be self-indulgent.
Friday, October 22, 2010
A Very Good Article on the Politics of the VAT in the US
This article gives an interesting take on the politics of taxes in the US. I'm a little sceptical that the tax problems the US has can be as firmly attributed to the Republicans as this article does, it seems a lot of our tax problems predate the changes in Republican orthodoxy mentioned in the article. However, it does seem to be a significant barrier to fixing a lot of our taxation problems. What it has to say about the reaction of many Republicans to Mitch Daniels talking sense on taxes and suggesting a VAT is also very interesting. It's worth reading but without knowing more about the history of taxation in the US I'm hesitant to comment too much on it. We are going to need a little less orthodoxy if we're going to tackle our country's problems on the revenue side, there's just no getting around this.
[Hat Tip: Economix]
[Hat Tip: Economix]
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