Don't Freeze the Future
Life is full of risk. No matter how hard we try, we can't eliminate that risk. Nor should we. Risk leads directly to rewards. Not all of the time. Sometimes risk leads to failure. But those failures teach us what we need to know in order to reach the rewards. More than that, it's impossible to reach a reward without taking a risk along the way.
Each crisis that comes along gives us a chance to learn a lesson and reach for a bigger reward. But we have another option. Instead of striving forward, we can cower in fear of what's around the bend. Instead of striving forward, we can attempt to stay exactly where we are, praying that things don't get worse.
That's where we are with this election. Michael Barone wrote today about Obama's vision for the country. It's a vision of fear. It's a vision that says we need to freeze things where they are, before they get any worse. It's a vision that seeks to remove all risk by franctically holding tight to what we have. It's a vision that just may prevent us from getting poorer. But it's also a vision that we'll ensure that we don't get richer.
Is this the vision you want?
The purpose of New Deal legislation was not, as commonly thought, to restore economic growth but rather to freeze the economy in place at a time when it seemed locked in a downward spiral. Its central program, the National Recovery Administration (NRA), created 700 industry councils for firms and unions to set minimum prices and wages. The Agricultural Adjustment Act (AAA), the ancestor of our farm bills, limited production to hold up prices. Unionization, encouraged by NRA and the 1935 Wagner Act, was meant to keep workers in jobs that the unemployed would have taken at lower pay.
These policies did break the downward spiral. But, as Amity Shlaes points out in The Forgotten Man, they failed to restore growth. Double-digit unemployment continued throughout the 1930s; despite population growth, the economy failed to rebound to 1920s production levels. High taxes on high earners (a Herbert Hoover as well as Franklin Roosevelt policy) financed welfare payments ("spread the wealth around") but reduced investment and growth.
Obama seems determined to follow policies better suited to freezing the economy in place than to promoting economic growth. Higher taxes on high earners, for one. He told Charlie Gibson he would raise capital-gains taxes even if that reduced revenue: less wealth to spread around, but at least the rich wouldn't have it -- reminiscent of the Puritan sumptuary laws that prohibited the wearing of silk. Moves toward protectionism like Hoover's (Roosevelt had the good sense to promote free trade). National health insurance that threatens to lead to rationing and to stifle innovation. Promoting unionization by abolishing secret ballot union elections.
Roosevelt in the 1930s had some extremely competent social engineers, like Harry Hopkins, Harold Ickes and Fiorello LaGuardia, who could enroll 750,000 people on welfare in three weeks and build an airport in less than a year. But even they could not spur the economic growth produced by utterly unknown and unconnected people, as Warren Buffett and Bill Gates were in 1970.
Reject social engineering. Reject the temptation to believe that somewhere out there is some One that can lead us into a brighter tomorrow. No One person can understand the American economy well enough to plan a brighter tomorrow. We only have one hope. And I won't lie: it entails risk.
We must place our hope in the thousands of inventors and entrepreneurs that will create the world of tomorrow. We don't know who they are. We don't know what they'll create. We don't know where they'll come from or where they'll take us. But if American history teaches us one thing, it teaches us this. The American entreprenurial spirit will take us somewhere we never expected, somewhere we never could have imagined, but somewhere far better than we dared dream. Just contrast the world of 1908 with the world of 2008. Wasn't it worth a little risk? Even with a Great Depression in the middle, didn't it turn out far better than our great-grandparents would have ever dreamed?
Reject fear and embrace hope. Reject those who would tie our economy down with new rules, with new regulations, with new concepts of "fairness". Embrace change, embrace risk, and look forward to the future with confidence. Looking back, I see no reason to fear looking forward.