Tom Friedman, America’s High Priest of Central Planning, is at it again. In his April 7 column “Who’s for Building Bridges?”, Mr. Friedman restates the basic economic fallacy of our day: “Obama-ism posits that we are now in a hypercompetitive global economy, where the country that thrives will be the one that brings together the most educated, creative and diverse work force with the best infrastructure — bandwidth, ports, airports, high-speed rail and good governance. And we’re in a world with a warming climate that is growing from 6.8 billion people to 9.2 billion by 2050, so demand for clean energy is going to go through the roof. Therefore, E.T. — energy technology — is going to be the next great global industry. So, government matters.”
Set aside for the moment the issue of whether high-speed rail and good governance can coexist on the same list. Mr. Friedman believes that government makes the economy grow. Good decisions come from Washington, not from the marketplace. He’s willing to discuss with us exactly how government should plan the economy, but whether the government should plan the economy is in his mind a foregone conclusion. This thinking leads him to endorse the prevailing Beltway view that the Republicans are the party of “no”.
I had hoped that Mr. Friedman had read my earlier posts, but there’s a slim possibility that he has not, so I’ll give it another shot. Technology, start-ups, risk-taking and wealth creation all come from the market, not from the government. The government should defend the country, lock up the bad guys, enforce contracts and maintain the stability of the currency. The free market will do everything else. When government tries to “help” the market, things get worse, not better.
Mr. Friedman suffers from the “technocratic” view of government. He sees Washington as a well-oil machine capable of analyzing economic issues and making carefully targeted regulatory and financial interventions to achieve national goals. There are lots of smart, dedicated and hard-working people in the federal government, but they have little influence over how Washington taxes, regulates or spends money. That job, alas, is firmly in the hands of the Congress. Congressmen and Senators do not analyze issues. They analyze their constituents’ perceptions of issues and always reach a single conclusion: voters will reward their elected officials for taxing their hard-earned money and then sending some of it back to them. Our Senators and Representatives put their hands into the federal money pot and pull out whatever they can. It doesn’t matter if the money is for road construction, a new courthouse or the National Museum of Peach Pits. Money is money. There’s no plan or policy behind this system. It would be more efficient to fly back and forth over the country in an airplane and throw money out the window. This spending increases our debt, but creates little of lasting value.
The United States is the richest, freest and most dynamic society that has ever existed, and our success is based on limited government that leaves the vast majority of economic decisions in private hands. Centrally planned economies, such as the Soviet Union, were complete and utter failures generating poverty, oppression and the worst environmental degradation ever experienced on the planet. During the 1970s, the Chinese began to recognize this fact and have gradually eased their economic (although not their political) grip on the country. Mr. Friedman seems unable to see that China is successful because of the free market part of its economy, not the centrally planned part. The coastal provinces flourish under capitalism, while the interior provinces still languish in the grip of central planning and state-managed institutions. India lags China because the Indian government is slow to release its grip on the economy. Mr. Friedman completely misunderstands what’s going on in the world.
Our Founding Fathers recognized this problem and wisely decided to limit what the federal government was empowered to do. In practice, those limitations have now essentially disappeared, largely through the distortion of the Constitution’s Interstate Commerce Clause. Over the years, the courts have ruled that the federal government can do almost anything it wants. Mr. Friedman applauds this development, and wants to use the expanded power of the government to manage our economic transition to the 21st century. If he succeeds, he, and the rest of us, will be sorely disappointed.