Monday, July 23, 2012

Fareed Zakaria: "What voters are really choosing in November"

Dear A,

Although Zakaria is too timid for my taste (and will always be remembered for his vigorous support of the Bush-Cheney Whimsy War), he also speaks in measured tones that, more often than not, seem intent on pragmatic solution rather than ideological firebombing.

His prudence is leavened by willingness to study "the wisdom of the world" without being obsequious to American "exceptionalists" who, ironically, are disproportionately responsible for trivializing America's erstwhile greatness. (Here's a longer version of this pointed "Newswroom" episode.

I think you'll enjoy the following articles.




What voters are really choosing in November

Fareed Zakarai

The presidential campaign has gotten so heated over the attacks and counterattacks from the Obama and Romney campaigns that it’s easy to forget that larger issues are at stake in November. That’s unfortunate because, beneath the froth, there is an important ideological debate to be had about America’s future.By Published: July 18

The attacks are, I suppose, inevitable. But let’s be honest: They’re largely untrue or irrelevant. Whatever the paperwork shows, Mitt Romney was not running Bain Capital after February 1999. Even if he had been, outsourcing jobs to lower a company’s costs — and ensure its survival — is not sleazy; it’s how you run a business efficiently. (Is President Obama suggesting that we put up tariff barriers to prevent outsourcing in the future?) On the other side, Romney’s recent claim accusing the president of shoveling government grants to his political supporters was so twisted it earned the Fact Checker’s highest score for distortion — “Four Pinocchios.”
Below all the mudslinging lies a real divide. Obama has been making the case that the U.S. economy needs investment — in infrastructure, education, training, basic sciences and technologies of the future. Those investments, in the president’s telling, have been the key drivers of American growth and have enabled people to build businesses, create jobs and invent the future.
Romney argues that America needs tax and regulatory relief. The country is overburdened by government mandates, taxes and rules that make it difficult for businesses to function, grow and prosper, he says. He wants to cut taxes for all, reduce regulations and streamline government. All this, in his telling, will unleash America’s entrepreneurial energy.
Both views have merit. It would make for a great campaign if our nation had a sustained discussion around these ideas. Then the election would produce a mandate to move in one of these directions.
In both cases, the candidates would have to explain how they would square their ambitions with long-term deficit reduction. If Obama plans to invest government funds in infrastructure, or if Romney intends to cut taxes, each needs a serious strategy of fiscal reform. Obama has been more specific than Romney, but neither has been entirely honest about what the numbers show are necessary to get America’s fiscal house in order: cuts to entitlement programs and higher taxes (whether through higher rates or the elimination of deductions such as the one for mortgage interest).
On the broader economic strategy, I think that Obama has the stronger case. We need a tax and regulatory structure that creates strong incentives for businesses to flourish. The thing is, we already have one. TheWorld Economic Forum’s 2011-12 Global Competitiveness Report ranks the United States No. 5 — and first among large economies. There has been a little slippage in this ranking the past few years, but it is modest and can be rectified. Overall, however, whether compared with our own past — of, say, 30 years ago — or with other countries, the United States has become more business-friendly. That’s why, just last week, the Economist magazine predicted an American economic renaissance.
America is worse off than it was 30 years ago — in infrastructure, education and research. The country spends much less on infrastructure as a percentage of gross domestic product (GDP). By 2009, federal funding for research and development washalf the share of GDP that it was in 1960. Even spending on education and training is lower as a percentage of the federal budget than it was during the 1980s.
The result is that we’re falling behind fast. In 2001, the World Economic Forum ranked U.S. infrastructure second in the world. In its latest report we were 24th. The United States spends only 2.4 percent of GDP on infrastructure, the Congressional Budget Office noted in 2010. Europe spends 5 percent; China, 9 percent. In the 1970s, America led the world in the number of college graduates; as of 2009, we were 14th among the countries tracked by the Organization for Economic Cooperation and Development. Annual growth for research and development spending — private and public — was 5.8 percent between 1996 and 2007; in South Korea it was 9.6 percent; in Singapore, 14.5 percent; in China, 21.9 percent.
In other words, the great shift in the U.S. economy over the past 30 years has not been an increase in taxes and regulations but, rather, a decline in investment in human and physical capital. President Obama has real facts and a strong case — which makes it all the more depressing that his campaign has focused on half-truths and weak arguments.
Excerpt from Zakaria's 1-18-12 article: "The economic lessons the rest of the world could teach us"
The great winner of this recession has been Germany. That country faced a crash just as dramatic as all others; in fact, Germany’s GDP declined more than that of the United States in 2008, yet its unemployment rate rebounded fast. There are many explanations for German success, but as Elisabeth Jacobs details in a new paper from the Brookings Institution, government policies that created incentives for business to think long-term, value their workers and invest in capacity all helped. The German system gives incentives to train workers and keep them employed; in contrast, the U.S. system emphasizes flexibility, the ability to hire and fire, and keeping wages low. Jacobs points out that, in a world filled with cheap labor, rich countries are better off with highly skilled workers, making premium products, with a focus on long-term growth and social stability. The German system, in other words, might be a better fit for the globalized world. When asked how they will create jobs, Republicans simply talk about cutting taxes and regulations and getting government out of the way. Yes, it is important to have competitive tax and regulatory policies. But the lessons from East Asia to Northern Europe suggest that government policy and investment can play a vital role in providing incentives for the private sector. If Republicans want to get practical, they might learn from this.
Republican adherence to inflexible ideology -- completely divorced from the muck of Reality -- is persistently counterproductive. 
Compromise is dirty business. It also works better than uncompromising purity. 

And it lies at the heart of democracy, not the plutocracy we currently have.
"The terrible thing about our time is precisely the ease with which theories can be put into practice.  The more perfect, the more idealistic the theories, the more dreadful is their realization.  We are at last beginning to rediscover what perhaps men knew better in very ancient times, in primitive times before utopias were thought of: that liberty is bound up with imperfection, and that limitations, imperfections, errors are not only unavoidable but also salutary. The best is not the ideal.  Where what is theoretically best is imposed on everyone as the norm, then there is no longer any room even to be good.  The best, imposed as a norm, becomes evil.”  Conjectures of a Guilty Bystander" by Thomas Merton

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