In the final days of 2008 as we take stock of where we’ve been and chart the course to where we want to go next, I read Tom Friedman’s latest Op-Ed from the New York Times with much interest. Despite the lack of specifics (or maybe because of it) I agree with the general concept.
We need a reboot. We need a build out. We need a buildup. We need a national makeover. That is why the next few months are among the most important in U.S. history. Because of the financial crisis, Barack Obama has the bipartisan support to spend $1 trillion in stimulus. But we must make certain that every bailout dollar, which we’re borrowing from our kids’ future, is spent wisely.
It has to go into training teachers, educating scientists and engineers, paying for research and building the most productivity-enhancing infrastructure — without building white elephants. Generally, I’d like to see fewer government dollars shoveled out and more creative tax incentives to stimulate the private sector to catalyze new industries and new markets. If we allow this money to be spent on pork, it will be the end of us.
The stimulus package that’s soon to be hashed out should take a portfolio approach to economic recovery. Some of the programs will obviously need to be structured to have an immediate impact on economic activity. This will include things like tax reductions, tax rebates, block grants to state and local governments and extension of unemployment benefits.
Longer-term projects with anticipated ROI greater than their initial investment will also need to be included in the portfolio. I really dislike the idea that my tax dollars are being spent with no regard for any return I or the nation will see if we spend those funds– hence my disagreement with a bailout of the auto industry. This is our opportunity to cut through political opposition and get moving on a number of infrastructure projects such as build-out of public transport (metro to Dulles International Airport, please) and upgrade and repair of bridges, levees and water distribution. I’ve read some mentions of spending on an electric grid to facilitate the movement of electrons from places where it is easily generated to places electricity is in highest demand to improve efficiency. A smart grid would make us safer by reducing the likelihood of massive blackouts caused by cascading failures in regional grids.
Grants to universities and other research institutions for hard science research is also money well spent. Obviously we are in need in considerable research in battery and materials technologies. Spending on these technologies can help our reformed auto industry (both domestic and foreign) build newer vehicles that are substantially more energy efficient and safer than the cars we drive today.
Any long-term stimulus package also must address the health care industry. I really have no idea what the initial cause (or set of causes) is for our current health care situation. It’s not going to get better with an entitlement time bomb, inconsistent or no coverage and what seems to be a complete mis-alignment of where most of our dollars are spent with where we see the real benefits in improvement in overall quality of life (can somebody PLEASE explain to me why my gym membership is not paid for by my insurance and why I would need to pay for a nutritionist completely out of my own pocket? Yeah, maybe these things are “elective” and it’s not like I’m getting Botox here!) In the end I suspect it’s the fact that our current system creates a complete disconnect among the customer/patient, the provider/doctor and the payer/insurance company and creates incentives for parties to maximize their own returns at the expense of all other players. I have no easy answer, and I don’t believe there is an easy answer.
The stimulus package must jump start the economy and deliver ROI to the taxpayers without putting the government in place of choosing the winners and losers in technology or in the marketplace. Legislators and bureaucrats are ill-prepared to make objective decisions about which technology or approach is the best approach to deploy high-speed broadband or automobile technologies or any of the other topics that are being considered in the context of an approach to stimulus. The stimulus package that works best is one that recognizes that in the early days of new approaches to our issues we serve ourselves well to have patience for divergence and pursuit of a broad array of solutions to each of the problems we’re trying to solve. Let a hundred flowers bloom…
It would be nice to see America’s political leaders move away from old frameworks to consider new options. Examples include a true re-evaluation of Social Security– and not taking options like private investment of pension funds off the table before the debate begins. Likewise we can open our political process to explore possibilities such as replacing income tax with a national sales tax. Putting options on the table for consideration in a broader negotiation of a beneficial way forward is not abandonment of one’s constituents or ideals. Let’s really move beyond our traditional modes of thinking to be creative.
Rather than continue on with a laundry list of ideas, I want to conclude this long, ill-conceived (and naive?) blog entry with a sense of optimism. We are coming up on a new year, a new Congress and a new Presidential administration. We are in a dire situation. We need to be aware that this is also a moment of great opportunity. It’s an opportunity for us as a country and even a global community to make the tough choices. Let’s not lose this moment to lobbying from incumbent moneyed interests. This is the opportunity for all of us to do what we need to do for the collective “us.” We will not have many of these chances in the future. If we don’t take advantage of this opportunity it may not come around again.
Merry Christmas and Happy Holidays!
