“The Big Idea” Seminar
New York, NY
February 23, 2016
by Daniel Rose
When educated rich
people who used to vote Republican now increasingly lean toward
Democrats and older working class whites who were staunch Democrats now
cheer Donald Trump, when traditional American optimism
has given way to fear for the future and 49% of the public say
“America’s best days are behind us,” social scientists are hard-pressed
to understand the spirit of the times. What is worse, they fail to
understand either the causes or remedies of the problems
that face us.
American
airports, bridges and highways, once a source of national pride, are
now a cause of embarrassment. American primary and secondary education,
once the world’s best, now rate poorly. America’s
health care expenditures, the world’s highest per capita, show
unimpressive results. The deforming role that gerrymandering and
unlimited campaign contributions play in political life is clear.
Unfunded pension liabilities of U.S. states exceed $3 trillion
and estimates of unfunded federal liabilities on Social Security,
Medicare and Medicaid go as high as $100 trillion. Foreign economies
like China and India, once patronized, are now regarded with
apprehension. Viewing the world morosely, the American public
has lost confidence in its political leaders and trust in our
‘establishment.’
To what
extent are public anger and feelings of betrayal justified? The record
is mixed. America has recovered from the Great Recession of 2008-2009
better than all other advanced economies and
its growth rate, a feeble 2%, is higher. Its unemployment rate (below
5%) is low and its violent crime rates are declining.
On the
other hand, median wages stagnate even as incomes at the top soar. Blue
collar workers feel displaced by globalization and no longer feel
catered to by politicians. Millennials face rising
college debt and diminishing employment opportunities. White
Christians, now a minority, feel they have ‘lost their country.’ Wars
in Iraq and Afghanistan have been inconclusive. Fear of terrorism has
grown and America is no longer the sole superpower it
was after the collapse of the Soviet Union.
The
traditional view Americans had of themselves — cheerful, optimistic,
hardworking, ambitious and family- minded in a society that essentially
worked well and would be even better for their children
— no longer applies.
Fearful,
threatened societies often turn to demagogues as saviors — Mussolini
made the trains run on time, Huey Long proclaimed ‘every man a king!’
But such times can also produce a Lincoln or
an FDR, who strengthen institutions and rally the public around shared
goals for the common good. They can create a ‘new normal’ that works,
one that draws on our own experience and on the lessons to be learned
from the experience of other nations. (For
example, the criminal justice system of every other advanced nation
focuses on crime prevention and the rehabilitation of malefactors. Only
the U.S. focuses on imprisonment and punishment, with off-the-scale
mass incarceration and horrendous recidivism rates.)
Our ‘new
normal’— barring unforeseen factors — can be what we make it.
Pessimists predict continuing stagnation; others (I am among them)
believe future American economic growth, greater social
equality, greater operational efficiency, restored confidence in our
institutions and revived public morality can be ours, if we make a
national commitment to achieve them. Not big government nor small
government but smart government and fair government
is what the public demands.
A prime requisite
will be an end to the paralyzing political polarization that has made
Congressional governance ineffective and has accounted for our
disappointing economic performance. ‘Dysfunctional’ is
the term commonly applied to Congress today, where efforts to build
consensus around shared national goals seem futile. Any compromise is
considered a betrayal of fundamental principles, and extremists believe
it better to shut down government rather than
permit objectionable legislation to pass. Opposing parties don’t meet
together or eat together and do not work together on common goals. Two
separate visions, two separate agendas are prevalent, with vitriolic
attack and counter-attack and zero effort at
national problem solving.
It was not that way in the past and need not be that way in the future.
Our first President
had liberal Thomas Jefferson whispering in his left ear and conservative
Alexander Hamilton whispering in his right ear as they worked together
to create our nation. In 1981, Republican
President Ronald Reagan and a Democratic-controlled Congress passed the
Economic Recovery Act, which dropped the top tax rate from 70% to 50%;
they later worked together to reduce the top rate to 28%. More
recently, President George H.W. Bush negotiated the
North American Free Trade Agreement (NAFTA) and his successor,
President Clinton, was determined to see it through. In a famous Rose
Garden event, Presidents Carter, Bush and Clinton stood shoulder to
shoulder, calling for — and achieving — NAFTA’s passage.
The governance we
had in the past we can have again. To achieve it, we must revitalize
what Arthur Schlesinger Jr. called The Vital Center, consisting of
‘Citizens’ rather than ‘Taxpayers;’ and we should
pledge to vote against the election of any Senator endorsed by
extremists of either the Tea Party or Occupy Wall Street. Joint
problem-solving, not short-term political advantage, must be the aim of
elected political figures.
The new paradigm we
need will reflect the achievable goals of continuing economic growth,
increasing economic and social equality, personal accountability of
individuals responsible for ‘making things work,’
renewed confidence in our institutions and a renewed spirit of public
morality. With fresh ‘outside the box’ thinking, our new paradigm could
be:
A) Increased Economic Growth Through Productivity
A society cannot
indefinitely spend what it does not produce; and productivity — the
output each worker generates — is a crucial factor in growth. Without
increases in efficiency and productivity, workers
can’t get paid more and the economy cannot expand.
Increased investment
— of human capital, industrial capital, financial capital and social
capital — must be focused on increased productivity, with national
investment in education and training heading the
list. By 2020, it is estimated, 65% of U.S. jobs will require
post-secondary education, and we must be ready.
Economic growth, with the benefits more equally shared than at present, must be a major and continuing public goal.
B) Increasing Equality
Economic and social
disparities will exist as long as incentives and rewards are necessary
to galvanize human activity. A public sense of a fair relationship
between rewards and merit (or luck or contribution
to the common good) is necessary for social harmony. The current
economic imbalance between the 1% at the top and the 99% of the rest is
not sustainable. Universal opinion demands that it must be re-cast. We
can grow and we can distribute increasing benefits
more fairly, and the public must feel reassured that the system is not
rigged against them. As the common law phrase has it, “Justice must be
done and must be seen to be done.”
Thoughtful
re-examination of our tax laws, elimination of obvious loopholes (such
as the widely deplored ‘carried interest’ exemptions) and consideration
of new sources of revenue are widely demanded.
A modest Value Added Tax (V.A.T.) on consumption, in addition to a
graduated income tax, is widely applied in every other advanced
economy. It is less easily evaded than other forms
of taxation, and with exemptions or ‘ceilings’ for the poor on food,
clothing, housing and healthcare, it is fairer. If the proceeds from a
national V.A.T. were strictly dedicated to a fund for an infrastructure
bank, scientific research and advanced academic
training, the benefits to society would be profound.
Social equality is a
more complex problem. We seek a society with level playing fields in
which everyone has a fair chance to achieve his or her potential.
Equality of result is impossible but equality of
opportunity — primarily through education — is a realistic goal, as
demonstrated today by the educational record of the Scandinavian
countries.
Education is a sensitive subject, but some unpopular comments are necessary:
i) Because
American public schools are financed by local property taxes, the poorer
districts that need better services do not receive them, while richer
neighborhoods receive services they could
afford to pay for privately. Someone, somehow, should move to have
quality public schooling paid for by state taxation rather than through
the local property tax.
Some states, like
California, have made progress along these lines, but states must be
ready, able and willing to spend more on education.
ii) ‘Dumbing
down’ the national educational enterprise — with lower standards, fewer
Advanced Placement courses, denigration of objective student evaluation
— is not the way to help disadvantaged students.
Aiding them effectively to meet the higher standards is. Inculcating
high aspirations early in life and providing the tools for their
achievement should be our goal for all children.
iii) The
trade union movement has historically been a plus in American life in
negotiating better pay, benefits and working conditions for its
members. It has been a minus in insisting on indefensibly
low professional entry standards and impossibly high barriers for
removing incompetent practitioners. For both school teachers and police,
higher entry standards would increase the respect in which the union
members are held (which is important to them) and
would also encourage the public to approve higher pay and benefits,
which good teachers deserve. More reasonable and efficient means of
eliminating the dysfunctional few (say, the worst 3%) would be a win-win
game for society, as the relatively few ‘bad eggs’
have undermined public confidence in the rest. (One percent of all
doctors account for 30% of all malpractice suits, and they should be
disqualified as well.)
iv)
Transparency, full disclosure and common sense must prevail in dealing
with education questions. That 25% of total U.S. K-12 expenditures go
for ‘special education’ for the handicapped and less
than 1% for programs for gifted children demonstrates the impact of
‘special interest’ influences. An aware, informed public might wish for
a different balance.
Finland, which
boasts the world’s best performing students, also has the world’s most
highly qualified and respected and most highly paid teachers, and this
is not a coincidence. Finland’s public high school
teachers come from the top 10% of the national academic pool. New York
City public school teachers come from the lowest quartile of our least
demanding public colleges and receive lifetime tenure two or three years
after starting. It is difficult to remove
the worst, and New York’s academic results reflect it.
v)
Retraining older or displaced workers for the five million unfilled U.S.
jobs must become a higher American priority. The U.S. spends 0.1% of
GDP on job retraining, apprenticeships and job search
assistance, while Germany spends 0.8% of GDP and Denmark 2.3% of GDP on
them.
Improved
employment prospects for older workers would have a dramatic impact on
American morale. The rising rates of depression, poor health and
suicide among older workers would be reduced by
the opportunity for meaningful, satisfying work and the self-respect
that comes from being self-supporting.
vi) Changing
college athletics competition from inter-collegiate to intramural would
dramatically improve American higher education.
No athletic
scholarships to distort the college admissions process, no expensive
football stadiums and huge athletic budgets to deform college economics,
and less wasted time for students would provide important
benefits with no loss!
vii) The case
for free quality education for the poor is a strong one, and the public
must be reminded that ‘education does not cost, it pays!’
Post World War II
studies of the G.I. Bill are perfect examples. In cases of identical
twins, one of whom was a G.I. Bill college graduate and the other of
whom was not, the graduate’s lifetime earnings and
lifetime income tax payments were greater. The differential in tax
receipts was the government’s excellent return on its tuition
investment. Only the Louisiana Purchase (1803) and the Purchase of
Alaska (1867) were better federal investments.
viii)
For-profit college ‘drop-out mills’ that saddle unsophisticated students
with strangling debt and worthless credentials should be severely
regulated (and receive no government aid) and for-profit
prisons (which bribe legislators to impose severe mandatory minimum
prison sentences and anti-parole practices) should be made illegal.
ix) Prudent
‘entitlement’ reform — reflecting wisdom, justice and thoughtful
examination of who should get what and when — is long overdue. Positive
incentives and negative incentives reflecting fairness
and commonsense in adjudicating between competing demands — all deserve
careful consideration by panels and commissions of informed private
citizens selected from our “best and brightest,” who bring to their
deliberations knowledge, character and a long term
perspective.
x) The
increase in U.S. heroin deaths (up 300% in the last decade) can be
fought by addressing the “supply” (through police and government) or the
“demand” (through community social pressure). Police
efforts have failed; now the community must become involved.
“New
users of drugs are stupid; they are killing themselves. Drug addicts
are sick; they must be helped medically. Drug sellers are evil; they
are destroying our community and they must be disgraced,
humiliated, ostracized.” These are messages that should be conveyed by
teachers, ministers, journalists, public officials and emphatically by
parents. Narcotics are a curse and must be recognized as such; those
who profit from them must be seen as public
enemies.
C) Accountability vs. Regulations Gone Wild
At a time when America’s physical infrastructure (graded D+ by the
American Society of Civil Engineers) is a national disgrace, when
borrowing interest rates are at a historic low and
our economy desperately needs jobs, our government cannot mount a major
infrastructure development program. The reason? Paralysis by red tape
has become the most serious ailment in America.
The average length of environmental reviews for highway projects is
over eight years, according to the Regional Plan Association; and the
review of the NY/NJ Goethals Bridge improvements
has now taken over ten years.
For reasons of national security and economic stimulus, we clearly need
a new national electric grid, but there is no current plan under
consideration. Why? New transmission lines
would go through forests and across deserts and somebody is sure to
object.
Today in America, anyone can say “no” — halt, delay, re-study. No one
can say “yes” and “I will take responsibility for a reasonable
outcome.” Other advanced nations are guided by
principles enforced by commonsense. In the U.S. ‘rule of law’ has
become perverted to a regulation-bound mindset resulting in paralysis.
In his important book “The Rule of Nobody,” Philip Howard describes how
American nursing homes and childcare facilities are strangled by
regulations, whereas in Australia and in Germany
agreed upon principles are interpreted by commonsense and implemented
by individuals accepting responsibility for desired results. Police in
Scotland — unarmed — achieve better results through commonsense
application of general principles than do American
police following detailed regulations.
Two final thoughts
merit serious consideration: first, the application of ‘sunset
provisions’ on all important government regulations; and secondly, the
greater use of independent, impartial civilian commissions,
such as those used to determine the closings of military bases.
Automatic expiration
of major government regulations after 15 or 20 years and their full
re-consideration before re-institution would dramatically modernize
government operations, as would the appropriate
use of independent civilian commissions to replace now-prevalent
political log-rolling. The increase in public confidence in government
would be palpable.
C) Time For A Moral Re-Awakening
As of February, 2016, 81% of respondents tell pollsters they believe
the U.S. government is corrupt. 61% believe most Congressmen will sell
their votes for cash or campaign contributions.
The New York City Council just voted itself a 32% salary increase “to
remove temptations to corruption” (that’s what they said!) and the U.S.
Attorney in Manhattan has publicly called the state government in
Albany ‘a cauldron of corruption’! The United
States ranks below every major European country on the Corruption
Perception Index of Transparency International. After the economic
explosion of 2008, many financial institutions were fined heavily for
fraud, but no one has gone to jail, and the fines are
widely seen as ‘the cost of doing business.’
An
aroused public should demand a renewed sense of probity from individuals
in all areas of public life, with shame, ostracism and prison for those
betraying the public trust and admiration and
respect for those performing “above and beyond the call of duty.”
Public officials convicted of major fraud should be dealt with as social
pariahs, not merely as individuals who ‘made a bad bet.’
America
has had Great Awakenings in the past and we are ready for another. This
one must emphasize not theology but morality, not life in the next
world but life in this one, not the role of the
individual but a sense of community and public spirit. Its theme can
be, “Yes, I am my brother’s keeper!”
\Conclusion
The strengths of
American society are real, but so are its weaknesses; both can be
addressed frankly and imaginatively. We must re-think our values and
our goals, re-consider the standards by which we judge
ourselves and our fellows and act accordingly. Financial corruption
and spiritual corruption are cancers destroying us, but they can be
overcome by an outraged public.
America’s ‘fall from
grace’ has been traumatic for many, resulting in the standard reactions
of denial, anger, bargaining and depression. Acceptance, the final
stage, can prove constructive if we demand it.
Paul Valery noted that “the future is not what it used to be.” If we apply wisdom, energy and determination, it can be better.