Sunday, December 26, 2010

Hot Flat and One-Sided: Thomas Friedman's World

Thomas Friedman dislikes the tax cut compromise that Obama cut with Republicans this month. Because both sides got what they wanted (tax cuts for the middle class, business growth incentives, and unemployment insurance for Democrats and tax cuts for the wealthy for Republicans), Friedman sees a failure to come to grips with the basic needs of the country. The Government can't give give give he says.

I'm being too kind to Friedman, because if that were his point, he'd be exactly right. The government cannot both cut its revenue and provide economic growth programs. Some government programs are vital to the healthy functioning of markets (such as derivatives regulation and food safety oversight), and spending the nation's resources on one-time less focused splurges like tax cuts is a very bad idea. Friedman is even right when he says, "to be a leader will mean, on balance, to take things away from people." But he is exactly wrong on what a leader should take away from people. He believes that 'taking away' means depleting the repository of tools at the government's disposal to police the market, fund economic programs, and pursue justice for its citizens.
"In my book, the leaders who will deserve praise in this new era are those who develop a hybrid politics that persuades a majority of voters to cut where we must so we can invest where we must. To survive in the 21st century, America can no longer afford a politics of irresponsible profligacy. But to thrive in the 21st century — to invest in education, infrastructure and innovation — America cannot afford a politics of mindless austerity either."
Friedman goes on to extoll Atlanta's mayor largely for cutting the small potatoes of city pensions, which for cities is a big deal. In the federal government, more good would come of putting a stop to multi-billion dollar never-will-be-used weapon systems and corn subsidies. But all of this is beside the point. The government should always be striving to become more efficient in providing the services that a community decides it is due from the general treasury. The hard part of leadership is making people pay for it.

Thomas Friedman won't say word one about the revenue side of the equation. We need a serious approach to deciding who should pay for the maintenance of fair markets and open society. Demanding "smart cuts" without demanding revenue to pay for the important and popular programs (which, by the way, are much more costly than employees' pensions) require asking for a bit more money from Americans. The government provides often overlooked value to businesses and investors: stability, the prestige of being an American company, and rule of law. It is time that those who benefit the most pay their fair share. I'm inclined to think that the Bush tax levels for millionaires is well below the value that the government provides to these individuals. They are getting much more from the government than they are putting in. This arrangement is a welfare check to the wealthy, and it has to stop. We need serious leaders and serious debates about both sides of the budget coin. We can't afford Thomas Friedman's one-sided world where spending cuts are the only item on the table.

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