11 May 2016

The Straight and Narrow Path to Progress

In last night's debate between California's senate candidates, front-runner Kamala Harris was asked by a San Diego State University student how she would make college more affordable. She responded on how, as the state's Attorney General, she'd gone after Corinthian College for charging students for an education that left them with debt payment but not much in the way of job prospects. It's good that she went after Corinthian. It's bad that a previous attack on a for-profit institution was all that she could muster in a state with a $30 billion college and university system. (In her defense, a one-minute response on a topic like this is laughable. Almost by definition, any response will sound more like a bumper sticker than an op-ed.) The impression I was left with was that in her mind the real problem is the for-profit sector, and that made me wince.

I hesitated to write this post because what I have to say seems so very obvious. It's like saying, "everybody is different." Duh. But then I watch national GOP debates and hear a messianic belief in markets and hear California Democrats who seem to have at best a grudging acknowledgement of the power of markets and I think, perhaps this is not so obvious at all. What is this? The path to progress is a straight and narrow one that involves continuously balancing free markets and free elections.

About a century ago, people began to realize the incredible power of governments to do good. The nation-state as a democratic institution was still largely novel around 1900 and citizens were just becoming aware of its power for good. Bismarck in Germany in the late 1800s was one of the first to institute things like old-age pensions and in various places unemployment and welfare programs were coming into practice. In the 20th century it became increasingly clear that governments could do amazing things like educate everyone, build roads and highways, put in place electric grids and dams, and even land on the moon. Anyone unimpressed with governments simply was not paying attention.

So along came communists who did not just rightfully feel delighted at the power of government but had decided that they didn't need markets to create the perfect society. What resulted was impressive in some ways (it's worth remembering that the Soviet Union's Sputnik got into space before anything out of the US) but a disaster in most. It wasn't that communists weren't right to be a little intoxicated by the power of government to transform lives. It was that they were wrong to think it was enough.

Now, roughly 100 years later, we have people who rightfully feel intoxicated by the power of markets and wrongfully see in them a panacea for progress. This would describe the GOP's presidential candidates. And these people are sort of right. Markets bring so many great products and innovations. While government seems able to bloat budgets, markets often make things cheaper. Markets are engines that create new jobs, wealth, and products. Anyone unimpressed with markets simply isn't paying attention.

Jon Stewart recently said of the Republican Party that they have a great thing going. The argue that government is unable to do anything good and then prove their thesis by obstructing government. At the national level, the GOP is slowly making itself harmful by its blind faith in markets that is akin to communists' blind faith in governments Ted Cruz wanted to eliminate the Environmental Protection Agency and dozens of other agencies and departments, so pure was his belief in the power of markets to even protect us from anyone who would disregard health in search of profits. And it's worth remembering that Cruz was the candidate who the party elders (reluctantly) supported in the final contest with Trump.

Maybe it's because the League of Women Voters decades ago decided that there was no topic so complex that it couldn't benefit from a 1 to 2 minute answer. At that point, debates between experts and politicians who had memorized sound bites tilted in favor of the master of sound bites rather than the master of the topic.  And gradually, it became important to have answers like "Government programs!" or "Markets!" and then we drifted away from the notion that what made our country great was not a reliance on one or the other but a continual balancing between these two amazing, transformative forces for good. And while the first generation of politicians forced into sound bite debates realized they were simplifying complex topics, the generation raised on such debates began to think that these sound bites were the topics.

Ideally, we have two parties who both believe in markets and government and we as voters simply choose whether we want to - in this election - steer more to the right with fewer regulations and taxes or to the left with more regulations and government programs. Instead, we have a Republican Party that preaches about the invisible hand of markets as if it were the left hand of God. And we have too many Democrats who - as Kamala Harris apparently does - can't even see the $30 billion problem before her for her because she's focused on the failings of a (relatively) small private business. At the national level, the GOP swears allegiance to markets and just swears at government. Here in California where Democrats have a super-majority, I have the suspicion that too many Democrats are more clear about the market's flaws than its strengths.

The iPhone is possibly the most profitable product in history. It relies on a host of products - from touch screen and GPS to chips and small memory devices - that emerged from government research labs. Such technologies take too long to develop and are too uncertain to be funded by the private sector. If you love your smart phone, you love the fact that you live in a world where strong government funding is coupled with strong private investment. That is, you love a world where smart people are doing what they can to strengthen governments and markets.

And this, finally, is the punchline. We are not hindered by our institutions, however frustrated we might feel with government or corporations. We are made by them. Without institutions, we're little different than apes. Forced to compete with an ape one-on-one - whether in hand to hand combat or simply to compete for resources and ability to survive in the wild - you would lose. Forced to compete in groups of a hundred or a million, the ape loses. We don't live the way we do because of our individual abilities. We live this way because of our ability to coordinate through institutions.  And the meta-institutions of our time are democracies and markets, the two forces that have - more or less - brought us the modern world. It's a straight and narrow path to progress and it involves continuously strengthening and improving our markets and governments but never running mindlessly towards either one as if in that direction we will find utopia.

It would be nice to feel more confident that something this obvious really were that obvious.

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