Over the last few years, and increasing in recent months, Fareed Zakaria has thrown off the shackles of his public role as a foreign policy commentator to become Time Magazine’s voice on the obstacles to American decline. Almost alone among the journalistic Mandarins, Zakaria is the voice of reason, common sense and adult responsibility.

Nowhere is that more in evidence than his new column on the ideological blinders that cripple American Conservatism. In an era when government is considered reflexively bad by both Democrats and Republicans, Zakaria takes a little time to remind us of some simple facts:

what is the evidence that tax cuts are the best path to revive the U.S. economy? Taxes — federal and state combined — as a percentage of GDP are at their lowest level since 1950. The U.S. is among the lowest taxed of the big industrial economies. So the case that America is grinding to a halt because of high taxation is not based on facts but is simply a theoretical assertion. The rich countries that are in the best shape right now, with strong growth and low unemployment, are ones like Germany and Denmark, neither one characterized by low taxes.

Many Republican businessmen have told me that the Obama Administration is the most hostile to business in 50 years. Really? More than that of Richard Nixon, who presided over tax rates that reached 70%, regulations that spanned whole industries, and who actually instituted price and wage controls?

In fact, right now any discussion of government involvement in the economy — even to build vital infrastructure — is impossible because it is a cardinal tenet of the new conservatism that such involvement is always and forever bad. Meanwhile, across the globe, the world’s fastest-growing economy, China, has managed to use government involvement to create growth and jobs for three decades. From Singapore to South Korea to Germany to Canada, evidence abounds that some strategic actions by the government can act as catalysts for free-market growth.

The Republican Right may be the most out-of-touch but Zakaria goes too easy on the rest of America. The idea that government has any positive role to play is entirely absent from our political culture. We complain bitterly about the lack of enforcement from Washington over a slew of industries and regulations—none more than Washington’s failure to rein in the mortgage and banking industries—but refuse to pay government officials and badger them over any status-conferring perks.

Worse still, in our zeal to denigrate government, we have taken to venerating the least efficient and productive sector of our economy, philanthropy. With Bill Gates and Warren Buffett touring the world with their misguided campaign to divert even more of the world’s capital into this wasteful and unaccountable sector, The Economist recently ran a side-by-side comparison of the IBM Corporation and Carnegie Endowment to determine which entity had created more social good over the last half century:

Judged on the past 50 years, there is a strong case for saying IBM has had more impact than Carnegie—especially if you count its accidental contribution to philanthropy by incompetently failing to stop Mr Gates from creating Microsoft. In part this is because its business, the management of information, has unusually large social benefits, and causes relatively few social or environmental costs.

In future, IBM expects to play an even greater role in profitably solving social problems by working with governments. “Everybody says they’re unsolvable—safe borders, clean water, energy. But the application of technology can solve a lot of these things we wrestle with,” points out Mr Palmisano. Firms in other, dirtier industries may not compare against philanthropy so well.

The Economist goes on to guess that the reason the Carnegie Endowment has not kept up with IBM is simply the dynamic nature of competition. Surviving a near-death experience and since having been remade again, IBM’s need to compete keeps the company from becoming sclerotic and complacent. The charity has no commensurate mechanism to keep it’s leaders “up at night.”

Returning to Zakaria’s point, what’s most striking about this bake off between IBM and Carnegie is that the mother of all social institutions–government–is absent from the evaluation. Despite government’s pervasive role–for both good and ill–in our lives, Americans seem determined to ignore its existence.

Even with all its flaws, government has accountability and competition built into the democratic system. The only question is why we—as citizens—don’t demand more of it.

>

Sources:
How Today’s Conservatism Lost Touch with Reality
FAREED ZAKARI
Time Magazine, June 16, 2011
http://www.time.com/time/nation/article/0,8599,2077943,00.html

The Centarians Square Up
The Economist, June 9, 2011
http://www.economist.com/node/18802844

Category: Think Tank

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

29 Responses to “Maybe Government Is the Solution”

  1. Matt SF says:

    Two government acronyms… NASA & DARPA.

    Now someone back calculate how much wealth and societal benefit has been generated by the private sector by piggybacking off the technological developments produced by these terrible socialist governmental agencies.

    Hint: aerospace, telecom, Internet, etc.

  2. Mike in Nola says:

    Matt: your comments remind me of a story out of the recent wingnut meeting where someone ranted about how NASA was unfit to run the space program. Sheesh.

    I suppose none of these people ride on interstates or use GPS.

  3. ilsm says:

    IBM is getting back into government work, which they left in the mid 90′s after botching a couple of big projects, because that is where the socialized profits, with no risk, are easiest outside of the finance industry.

    Blue may be late getting in on the war boom though.

    And if the congress wakes up and asks for industry to not socialize the risk as much…………………………..

  4. MichaelTrader says:

    Would not logic follow that if government spending is so positive, why not make tax rates 100%?

    Hmm… I guess that has been tried before?

  5. Moss says:

    The Right simply has total disdain for Obama which is exaggerating their usual backwardness, causing them to fall back on ‘core’ ideological beliefs. They simply can’t accept the fact that a non white is President. They couch everything in pure Constitutional rhetoric as if 1776 was last week. The only thing they are interested in is bringing him down and making sure it does not happen again.

  6. I generally agree with a lot of what Fareed has to say, but he needs to brush up on his history:

    http://www.polycapitalist.com/2011/06/video-cnns-fareed-zakaria-needs-to.html

  7. Tony in Dallas says:

    There is no right/wrong mix. There is just an ideological difference in world view. It is basically the same as argument for the punishment for crimes. Conservatives want to lock them up and liberals want to rehabilitate.

    Fundamentally conservatives believe that they can take care of their money better than Uncle Sam can. Sometime they can and sometimes they can’t. Common good arguments where private enterprise goals and interests are an ill fit for societal good should be done by the government. Examples being fire, rescue, police etc…

    What riles the conservatives now is that there are no limit as to what the government can get involved in. Health care, and the environment being the latest two salvos.

    Anyway… just my opinion so take it for what it cost you.

    Tony

  8. Equityval says:

    Accountability and competition built into the system? Hardly, at least in the current form.

    What’s the re-election rate of incumbents – generally off the charts due to abuse of the franking privelege and gerrymandering. Accountability – how many people in the SEC were fired over the Madoff whiff, which was laid at their feet in excruciating detail by a whistleblower?

    How about effectiveness: Amtrak, the air traffic control system, Fannie and Freddie, PBGC, and many of our public school sytems. How long have the powers in goverment that be tolerated these disfunctional government entities – for decades.

    What most Americans know is that a good deal of government spending goes down a rathole. Inputs are generally all that are measured, outputs hardly ever. Almost no program is ever discontinued despite having been proven ineffective, destructive or having outlived its usefulness – because there is always a constituency that games the political process by feeding contributions to a few key members who keep the programs alive despite an overwhelmingly negative cost benefit relationship.

    They see government employees gaming the system by funneling campaign cash to politicians who reward them with pension and benefit schemes that the average working stiff could only dream of, and who then turn a blind eye while the public employees abuse these benefits and pad their pensions with obscene amounts of end of career overtime. Taxpayers then see these employees act as though their constitutional rights have been violated when they are asked to share the pain with the taxpayer who has likely seen his own compensation cut and property taxes raised. These things are bankrupting many cities and states yet the public sector employees act as if they bear no responsibility for the problem.

    They see 90% of the LIRR retirees claiming disability (and getting it) who then spend their days playing golf on taxpayer subsidized courses. They see subway employees pushing a broom for $25 an hour who can retire with a full pension at 55 – and taxpayers are then asked to pony up with a new payroll tax to pay for it all. They see roughly 10% of the New York State legislature charged with a serious crime over the last 5 years and a culture of corruption in NJ so rampant that indictments are practically a weekly event. (And I only mention those two states because I live in the area and don’t have time to keep up with all the chicanery that goes on around the country like the city manager in Bell, CA who paid himself $800K a year).

    I’m sorry Marion, the culture of our public sector is rotten. There is very little sense of service or obligation to the public. Elected and appointed positions are used to further the parochial interests of the people that occupy them and not as intruments to be used in the furtherance of the public weal. There is a sense of entitlement in the public sphere that is palpable and very rarely does one get a sense of service or obligation to the public to spend hard earned tax dollars wisely. We are demanding more of government, but the people that comprise it aren’t listening or don’t seem to take our objections to heart.

    The only exception to the above that I will grant you is the military, who carry out amazing feats of bravery, diplomacy and service in conditions that many of us can’t imagine for very modest pay. We are truly blessed to served by them, and it is one of the few parts of government where I feel our money is well spent (apart from the wisdom of the politicial decisions as to which wars to fight).

  9. favjr says:

    There is an interesting historical connection between government in IBM. In the early 30s IBM continued to expand and almost died. It was saved by the new social programs of FDR, which required massive collections of information and data processing that had never been done before. IBM won the contract for enabling social security and prospered.

    The punch card technology of IBM at that time, known as “Hollerith”, had been acquired from a German company. A black mark on IBM’s history was that it also contracted with the Nazi regime, which helped the Nazis to control populations and use racial profiling to separate them. Although he later returned it, Tom Watson Sr. accepted a German medal from Hitler in 1937 and wore it proudly until the war broke out.

  10. victor says:

    1) “The U.S. is among the lowest taxed of the big industrial economies”: really? US corporate tax rate (35% PLUS state tax rate) is second largest after Japan. Hey young Fareed! check out Sweeden’s (12%!)

    2) Fareed! USA is NOT Denmark, stop using meaningless comparisons

    3) @ MichaelTrader: right on, good comment!

    4) Wasteful entities in reversed order: Small Business, Large Business, and greatest wasteful entity: Government

  11. Matt SF says:

    @ Mike in Nola

    I was being sarcastic Mike. Read a little deeper.

    Many bozos bash government for being useless, but as a former gov R&D scientist myself, I know all too well how private industry relies upon gov to do the expensive research so they can attempt to monetize the derivative spin offs.

  12. socaljoe says:

    Endless wars, unaffordable welfare, bailout of well connected losers, rule by special interest, legislation for sale, debts that can never be repaid, obligations that can never be met… and you think government is the solution?

  13. [...] Marion Maneker on Zakaria’s Truth Telling (June 16th, 2011) [...]

  14. Sechel says:

    Good intentions lead to unintended consequences, whether in urban renewal, affirmative action, welfare or busing, etc It’s the private sector, which grows the GDP that pays for all these programs. I’ll point to a more recent example, wind and solar were to “government’s solution” toward energy independence, but it seems we know have an over-abundance of natural gas which is destroying the economics of these alternative energy sources. The government is terrible at picking winners and losers… Another case in point is housing which had an over-investment of resources as a result of government policy. Government does have a role but it’s in enforcing rule of law

  15. Equityval says:

    David Brooks does a great job of articulating my point about the rotten culture of government.

    http://www.nytimes.com/2011/06/17/opinion/17brooks.html

    Matt in SF: you are correct that the government has a role to play in basic research – the economic case for an individual firm doing basic research is generally weak but the societal benefits of scientific advancements are sometimes immense as in the case of the internet. However, the culture that we have in government isn’t making the right choices and prioritizing things like this that government can do that have a great return on tax dollars. Instead they are preserving unsustainble ponzi scheme benefit programs and cutting out the things where government can actually add value.

    Pouring more money into a system that is broken won’t do anything other than bankrupt the country faster. Fix the culture, force it priortize and make smart choices, rather than those paid for by special interests, and then we can talk about whether there are rational investments that can be made by the government that benefit the greater good. That is quite clearly what is not going on in Washington and many state capitals these days.

  16. strousd says:

    What a totally biased and one-sided article by Zakaria. One only needs to look at the once great state of Illinois to know that the idea of government accountability and competition is complete rubbish. The question of why voters won’t demand it is simple. People will vote for whoever hands them the most benefits, leading to the corruption and fiscal malfeasance we have seen in Illinois, and politicians who refuse to solve problems and clean up the system because they want to stay in office forever. How come everyone complains about private sector executives getting rich, but nobody complains about politicians getting rich? Private sector executives are paid by shareholders, but politicians get rich off the backs of taxpayers.

    My hat is off to Equityval for his/her comments. I couldn’t have said it any better. And by the way, when was the last time a Democrat or the Democrats’ policies were criticized on this blog? I can’t remember a single time.

  17. Chad says:

    @victor

    “1) “The U.S. is among the lowest taxed of the big industrial economies”: really? US corporate tax rate (35% PLUS state tax rate) is second largest after Japan. Hey young Fareed! check out Sweeden’s (12%!)”

    Either you are blatanly lying or too dumb to realize that no corporation pays 35%. Far too many loopholes. You could have made a legit argument with the coporate tax rate, but you failed.

    @Michael Trader and victor
    Stupid…stupid…stupid analogy. If this brilliant analogy worked why wouldn’t we make 100% of our diet tomatoes? They are good for us aren’t they? Yes. Thus, your so called “logic” would dictate we only eat tomatoes. Unfortunately, this would leave us severly vitamin, mineral, carbohydrate and protein deficient, as only vitamins A and C are plentiful in tomatoes. We would develop numerous deadly conditions. Anemia being one due to a lack of B vitamins.

    Yep, a really lovely plan guys.

  18. inessence says:

    “Maybe government is the solution?” No, limited government is the solution.

  19. Chad says:

    @Equityval and strousd
    We do have issues right now with some of our public servants. But, the answer isn’t getting rid of government it is reforming it. Not all government is bad, as Matt SF pointed out. Just like not all private enterprise is good. The world isn’t black and white, so we need both government and private enterprise, and we need to make changes to the system every now and then.

  20. Marion Maneker says:

    Equityval,

    I don’t disagree with many of your points. But I do think that we’ve allowed the public sector to run amok precisely because we’ve abandoned the idea that government plays a positive role.

    However, your comments about the military are mawkish nonsense. The military is a huge part of the government but you want to re-define it outside of the problem/solution? And why do you think the military is underpaid. They have fantastic benefits. Indeed, it is a socialist organization of the highest order.

    If the American military works, then government works. If the military is an organization worthy of emulation, then government offers the solution. There was a time with the Defense Dept. was the problem. It wasn’t reformed by starving it of cash. Quite the opposite.

    Our military budget is immense and a source of our fiscal problems. We use the military to run policies that other countries do through civilian branches. Do we do this because we demonize government and shun anyone who seeks a career as civil servant?

  21. Uchicagoman says:

    To echo MichaelTrader, so what exactly is suggesting?

    why do so many people assume government is some magic bullet for society’s problems?

  22. wannabe says:

    “Washington’s failure to rein in the mortgage and banking industries”

    This confuses me… why would washington try to rein in what it had spurred on for so many decades?

    The root cause of the financial crisis was govt policy which worshipped at the alter of “the American dream” (mortgage interest deduction, CRA, GSE housing goals) combined with the Fed’s ZIRP creating a bubble inflated by buyers desperate to buy before it was too late, lenders making money hand over fist, and MBS investors desperate for yield. The regulators were captured by industry (Wall St. and the GSEs) or cowed by accusations of racism from lawsellers bought by industry.

    The collapse happened at a time when the Government is bigger (more employees, more agencies) and more intrusive (numbers of laws, regulations and tax codes) then at any time in the history of our nation and your answer to our problems is more of the same? The lawsellers privatized the profits and socialised the losses of their Wall St. bosses and cronies creating a zombie economy and now they should be rewarded for it?

    Does not compute.

  23. Tony in Dallas says:

    I do not believe this is an issue of government being the source or cause of the current problem. The real issue is what are the boundaries of government.

    Where is the line? What do we want to do ourselves and what do we want someone else to tell us to do? Once you blur the line between personal accountability and government authority you end up legislating to the lowest common denominator. You put laws in place to cover the small percentage of bad actors in the system.

    I think fundamentally we should limit the size of government but only if society as a whole acts in a responsible manner. I do not want to have the bankers playing fast and loose with mortgages the same way I do not want my heath coverage dictated by the government.

    This is an issue for the ballot box in 2012. Pick your side and go to the polls. Do not be afraid that only the self interests of the majority will prevail at the ballot box. The vast middle of the country are actually smarter than than to vote a straight self interest ticket and that if you make them mad enough you will pay the price of being ejected from office (see 2008 and 2010).

    Tony

  24. victor says:

    @ Chad,

    OK I’m either lying (presumably hired by the bad US private sector that wants a level playing field with the rest of the world’s corporate tax rates) or to dumb to realize that the actual Corporate tax rate is smaller due to “too many loopholes” that you’d presumably close to REALLY punish the US Private Sector? Get a life and stop insulting the contributors to this otherwise great blog!

  25. Malachi says:

    It’s not government that is broken. It is our system of government that is broken.

    A campaign finance system that rewards whores, lobbyists on speed dial, gerrymandering to hold onto power, a revolving door between government agencies that are meant to regulate and high paid jobs within the very companies they are meant to set beneficial public guidelines for – it’s a recipe for ineffective government.

    There is a certain level of government that is beneficial for all of us.

    We ought to be focused on how we can create a more effective government system.

  26. victor says:

    Government more efficient and more productive than, say the Gates/Buffett Foundation? This is counter intuitive. Perhaps the Economist assumes that philanthropy outlays are tax loopholes? I wonder how much, for example, The Gates’ Foundation’s spending is from after tax money?

  27. Chad says:

    @victor

    “the actual Corporate tax rate is smaller due to “too many loopholes” that you’d presumably close to REALLY punish the US Private Sector?”

    In no way did I say I wanted to punish the private sector. Actually, I suggested you could have made a legit argument, which would have inferred that I don’t want to punish the private sector. Unfortunately, that seems like it required too much reading comprehension for you to understand.

    When you can think for yourself…maybe our country stands a chance.

  28. victor says:

    @Chad,

    You are clearly incorrigible; you just cannot help putting other people down. Just wait: eventually BR will catch up with you.