Sunday, December 25, 2011

Peace on Earth and Good Will to Men!


Thomas L. Friedman and Michael Mandelbaum, authors of That Used to Be Us: How America Fell Behind in the World It Invented and How We Can Come Back, believe that the United States has overall been a positive force in world affairs. I would agree, although perhaps not as uniformly so as many Americans would believe not without factions within the United States opposing our best efforts.

The United States has generally sought to promote peace, has stood as a symbol of democracy and sometimes acted to promote self determination, and has promoted human rights. One looks back Wilson's efforts to promote self determination of peoples and a League of Nations to deter future wars, to Roosevelt's leadership against fascism in World War II, Truman led efforts to rebuild our allies and even our enemies economies after that War, the U.S. support for decolonization and the emergence of new nations, Kennedy's leadership of the nation in support of development of poor nations, and Carter's bringing human rights into U.S. foreign policy.

Friedman and Mandelbaum also recognize that U.S. influence has depended on the strength of the U.S. economy, and that that economic strength is now threatened and with it positive aspects of the world order that the United States has supported.

The Economy


I have read that people sometimes confuse "comparative advantage" with "competitive advantage". The first is a theory that the difference in relative costs of production of different tradables in different countries leads to situations in which countries can profit by producing those goods in which they have a comparative advantage and trading them for goods in which another country has comparative advantage.

Competitive advantage comes from producing goods or services either that other countries can not produce or can not produce competitively, creating jobs and profits by exporting those products.

In an increasingly globalized world, a world in which the transaction costs of international trade are small relative to the costs of production, there will be more opportunities for trade based on comparative advantages. The United States economy will, in all probability, be increasingly integrated into international markets.

Friedman and Mandelbaum, correctly I believe, emphasize that the United States must invest in education, technology and infrastructure in order to rebuild and expand its competitiveness. Unfortunately we are consuming too much and investing too little, and in fact wasting resources.

Our educational system discriminates against a vast underclass, and too often provides education as a consumer service rather than as an investment in our economic future (or indeed as a preparation for effective social and political participation). We are not only not investing enough in new infrastructure, but we are allowing our existing infrastructure of roads, railroads, ports, energy, water, sewerage, and communications and information to decay unrepaired. We have not invested enough to maintain the global lead we once held in invention and technological improvement.

Our federal government has been run for decades by Republicans (Reagan, Bush I, Bush II) who found that spending more than they taxed was a recepe for political success. As individuals we have bought houses we could not afford by the millions, and run up credit card debt in order to buy stuff we neither needed nor could afford. We have as a nation gone into debt to foreign nations by running trade deficits for decades, in order to consume more than we produce.

The fault is in part that of our political leaders, but far more in ourselves. We eat our seed corn in order to get fatter! We are too often greedy rather than wise. We live in a democracy, yet we don't throw out the politicians who vote for bad economic policies, and indeed we allow changes in our political system that empower the greedy and unwise.

The Environment

Friedman and Mandelbaum correctly feel that the risks to the world from climate change and prudence require immediate efforts to reduce the global production of greenhouse gases. While there has been considerable progress in the United States in cleaning up water and air, on a global scale there continue to be threats to health from polluted water and air. There are also threats from deforestation, desertification, loss of biodiversity, pollution, loss of coral reefs and fisheries, etc.

Environmental degradation, including global warming and consequent sea level rises and loss of fresh water resources, represent a threat not only to the U.S. economy and the welfare of Americans but to all the world's people and the world order.

What do we do?

I think we need a cultural change. Friedman and Mandelbaum focus on the need for political movements, perhaps a third party that would help bring the parties back to the demands of a "radical center". I suspect that the Tea Party movement and the Occupy movement are steps in the right direction, demanding change.

I would think that we also need leadership from public intellectuals and from the media to promote the kinds of cultural changes that we need. Friedman and Mandelbaum note a failure of ethics; the willingness of our ancestors to save and sacrifice for the future seems to have eroded.

Perhaps that is in part due to the fact that we have allowed our society to lose its support for social mobility. Ours is no longer a society in which almost everyone feels that their children can do better than they do themselves if they and their children only work and invest in themselves. Many of us seem to think that if we only allow the rich to get richer faster, they will save us all by the wealth trickling down. (That does not work!)

Reporters, teachers, bloggers, anyone who can reach the public should be promoting a better society with more opportunity for all in the pursuit of happiness, more willingness to save and invest in ourselves, more willingness to help our neighbors, and less willingness to tolerate the greed and self-serving behavior of our self-appointed leaders.

Merry Christmas and Happy New Year!

No comments: