A brief note on David Brooks’s excellent April 5th column:
In sum, the U.S. is on the verge of a demographic, economic and social revival, built on its historic strengths. The U.S. has always been good at disruptive change. It’s always excelled at decentralized community-building. It’s always had that moral materialism that creates meaning-rich products. Surely a country with this much going for it is not going to wait around passively and let a rotten political culture drag it down.
I agree with this sentiment. That said, the arguments that David uses in the column — consider our demographic vitality, our culture of entrepreneurship, and our R&D prowess — strike me as good reasons to believe that the United States will fare relatively well against other OECD economies, not arguments that the U.S. economy will meet the high expectations of young people in the next decade or two. It’s certainly true that the future is unknowable.
But a decent middle-series projection tells us that we will face much higher taxes, we will see benefits trimmed, we will see tighter regulation of labor markets, and we will be a less open, more cash-strapped country. Our stuff will keep getting better — an iPad in every pot! — but the cost of subsidizing legacy sectors of the economy, ranging from the big auto manufacturers to the big banks, will make the kind of renewal David has in mind far more expensive and difficult that it needs to be. This will create an opportunity for countries with less rotten political cultures to remake their institutions by shedding legacy costs and facilitating disruptive change.
All indications suggest that the U.S. is becoming a more security-oriented rather than a more growth-oriented society, which is natural: Americans have a lot to lose, and so it’s hardly surprising that we’ve grown pretty risk-averse. The churn of immigration helps mitigate this, but of course it also creates other costs. There is no silver bullet for addressing this cultural shift: the only thing to do is keep making the argument that our openness and dynamism depends on sustainable fiscal policies, and that means shrinking the state or at the very least making it more transparent and fully-funded rather than making it larger and more opaque.