Saturday, November 12, 2011

Book Review: That Used To Be Us

For the better part of three decades, Thomas Friedman has written about foreign affairs and the global economy with a rare ability to take complex macro-level concepts and distill them down into catchy, basic ideas that are not only easily understandable to the average reader, but intelligible as well.  For example, not long after 9/11, he observed that our money funds both sides of the "war on terror" - with the dollars we spend fighting in Afghanistan and Iraq (more on the latter, later) and with the money we spend on gasoline, which Arab countries use to fund the madrassas that teach young, unemployable boys and men to hate America, which in turn fuels terrorism.  Friedman's initial focus was primarily the Middle East (his seminal work, From Beirut to Jerusalem, remains, in my view, the essential primer on the subject) but as the years passed, his lens broadened to look at globalization, the rise of third world economies and the post-9/11 world.  

For his most recent work, That Used To Be Us, he has a co-author, Michael Mandelbaum, a professor at Johns Hopkins University.  In 356 pages, the authors attempt to summarize how we, the United States of America, ended up in the deep fiscal and competitiveness hole we find ourselves in and propose some solutions for getting out.  Readers of Friedman's prior work will see his hand in the narrative flow and pithy asides (e.g., our need for an "ET" (energy technology) revolution) and use of anecdotal evidence to tease out broader themes.  Readers of Mandelbaum's work are on your own, I haven't read any of his books.  

If Mssrs. Friedman and Mandelbaum were doctors, I would say they do a far better job of diagnosing the illness than coming up with a cure.  In tracing our country's economic arc from agrarian to industrial, they rightly point to five areas - education, infrastructure, immigration, research and development and regulation - as the pillars upon which our competitive advantage in the world has rested and deconstruct how each has atrophied or been ignored in recent years.  For example, they note that the time to process immigration visas is long, our post-9/11 procedures disincentive people from seeking them and as other economies have risen, there is less reason for white-collar immigrants to stay in America if they moved here for an education.  By failing to attract (and keep) immigrants in the country who are interested in building businesses, conducting research and development and taking the education they received here and applying it in positive ways, we lose twice - we have given immigrants the tools (a good education) to take back to their home country to compete against us while losing their skill and ability.   

The book also makes a clear and compelling case for the connection between educational attainment and global competitiveness.  As the global economy "flattened," that is, access to capital markets became greater, technology leveled the ability of people throughout the world to access information and compete, America could no longer presume to be the world's leader, but we got, in the authors' words "fat and lazy."  In everything from the U.S. Army to the smallest start-up, no longer is a mere high school education sufficient.  The rapid development of technology and its utilization in everything from IED-detection in Iraq to health care requires greater *and* more sophisticated educational ability, something, the authors note, America is not doing nearly as well as it used to.  For example, they cite a math and science test administered to 15 year-olds throughout Western countries which is used to gauge problem solving skills.  American students finish in the middle of the pack and, more generally, when it comes to standardized testing, while our students are competitive at a younger age (4th grade), by high school, they fall behind peers in Finland, Korea and Singapore.  More depressing is a study cited in the book that almost half of all adults in Detroit are functionally illiterate, and comments by current Department of Education Secretary Arne Duncan that roughly 25 percent of 9th graders fail to graduate high school within four years and only 60 percent of students who enter a four-year college graduate within six years.  

The authors strongly support educational reform that recognizes the central role that teachers and principals play in the development of children; however, they note that the manner in which education is delivered in our country almost ensures that benefits received by a student by an above average teacher one year can be quickly erased if that student does not have a similarly high level of teacher in subsequent years.  Further, they talk about how the gap is not just between minority students and whites, but between whites and the students of the rest of the world.  In short, they argue, the challenge our educational system faces not only has to do with raising the educational standards of minority students so they are on a par with whites, but that all students must then rise to meet the challenges of their peers worldwide, who have relentlessly focused on improving teaching, critical thinking and access to technology as we have ignored them.  

With regard to research and development and infrastructure, Friedman and Mandelbaum correctly point out that both are critical to the long-term viability of our economy.  Some time ago, Friedman noted in one of his New York Times columns the dissonance he experienced in flying from China to the United States and how the airport he flew out of in China (I forget the city) was modern, well appointed and easy to navigate, while the terminal in (I believe) New York City was cramped and dated.  Here, the authors point out that things taken for granted in China, bullet trains that travel at near 200 miles per hour with perfect cell phone reception and Internet connectivity, are largely a pipe dream in America, where high speed rail is demonized as a government boondoggle, Republicans attempt to cut funding to Amtrak and one is lucky to have a cell phone call dropped less than a few times on the Acela between New York and Washington. They also note that Americans spend more on potato chips in a year than the federal government puts into research and development during that same time. Lastly, there is the gratuitous plug for energy independence and investment in green technology, an idea that has long animated Friedman's writing and is no less relevant today than it was 10 years ago.

While the book does a good job not only of framing our historical commitment to what they refer to as the "five pillars" of our economy, but also of noting where we are falling short in laboratories, schools and science fairs, the authors lost me in their overview of our political system and its failings.  The authors dub the Bush Era as the "Terrible Twos," a time where taxes were cut while we invested a trillion dollars in war and new prescription drug benefits while forgetting the needs of education, investment, infrastructure spending and research and development. This, according to the authors, has only carried over into the Obama Administration.   Their thesis is true so far as it goes but the premise is disingenuous.  First and foremost, while bemoaning the enormous fiscal calamity the Bush years were, Friedman mentions only in passing his prior, full-throttled support for the Iraq War without noting its enormous cost, in human life and general treasury.  Indeed, many of the prescriptions vaguely pointed to later in the book could have come to fruition (and then some) with the nearly trillion dollars poured into the Iraqi desert.  

Second, they rely on the odd mainstream media position that Republicans like Lindsey Graham, Robert Bennett and Bob Inglis somehow pass as moderates who just want to get things done.  A passage with Graham on pages 203-05 is particularly noxious.  The authors recite how Graham was working with Senators John Kerry and Joe Lieberman on an energy bill that would have imposed a carbon tax in an effort to encourage the use of clean energy, spur development and improve our environment.  In a true "profile in courage," Graham fretted more about leaks in the negotiation than the forward-thinking work that was being done.  The authors quote Graham as saying "[T]he second [the Fox newscasters] focus on us, it's gonna be all cap-and-tax all the time, and it's gonna become a disaster for me on the airwaves." (emphasis added).  Naturally, when the Fox spin machine started, Graham walked away from the discussion.  See, instead of standing on principle and defending the importance of legislation that would spur our economy, clean our air and punish polluters, Lindsey Graham was worried about being dinged by some talking heads on conservative cable television.  This point eludes the authors, who fail to mention that the House passed clean energy legislation and pin blame on President Obama for not spending "political capital" to help the process.  Moreover, the authors fail to note Graham's lockstep voting with his Senate Republican colleagues in setting a modern day record for the use of the filibuster, and in many situations, killing legislation passed by the House during President Obama's first two years in office.

So who else did Friedman and Mandelbaum interview to show the frustrations in our nation's capital?  Former Congressman Bob Inglis.  He was one of the managers of President Clinton's impeachment and served in the House of Representatives until last year, when he lost a primary contest to an even more conservative Republican challenger.  Inglis's insight into our nation's politics was captured by the authors thusly: "Democrats tend to concentrate on fairness.  Republicans excel at building meritocracies." Indeed they do, Congressman.  Savings and loans were wonderful institutions until they collapsed and cost us more than $100 billion to be bailed out.  The financial industry was deregulated and ultimately sunk the entire economy and oil and gas companies gorge on federal subsidies and corporate loopholes even as they collect record profits.  Similarly, former Senator Robert Bennett, he of the near 90% rating by the American Conservative Union before being ousted by a "Tea Party" challenger in a 2010 primary, bemoans the partisanship while the authors blithely ignore Bennett's own intransigence or his post-congressional career as a Washington lobbyist at a large D.C. law firm.  That all of these Republicans were in office and voted for the budget busting tax cuts, two wars and a prescription drug benefit plan under Medicare, all of which were put "on the credit card" goes entirely unmentioned.  

To be fair, the authors do cite those fiscal errors on the Republican side of the ledger generally but, in a misguided attempt to be (pardon) "fair and balanced," pin state and local fiscal woes on (their opinion) profligate pension and raises given by Democrats to union workers.  This false equivalency is lazy journalism done in the service of attempting to frame a narrative of shared blame.  For example, in my home state of New Jersey, it was a Republican governor (Christie Whitman) who raided the pension fund of state workers to pay for a statewide tax cut and then failed to repay that debt, instead hoping that unrealistic stock market returns would fill the gap (they didn't).  When she left the Governor's mansion to become EPA Administrator, her successor (also a Republican) gave state workers a generous bump in their pension calculation and salary.  While it is true that some Democratic governors did the same thing, the problem with trying to conflate what one body (U.S. Congress) did with what 50 states and myriad localities and municipalities did, is that at the state and local level, the "blame" is not one sided, whereas by and large, a Republican President, aided by Republican majorities for much of his presidency, redistributed hundreds of billions of dollars into the coffers of the wealthy while spending hundreds of billions more on Iraq and Afghanistan and giving seniors a (mediocre) prescription drug benefit without paying for any of it.

The other main shortcoming of the book is that the "solutions" are buried 300 pages into the book and are elusive at best and unrealistic at worst.  They pull out the familiar refrain that we need to make the right investments in education, infrastructure and R&D, scale back entitlement spending and raise taxes.  Essentially, the point that President Obama has been making for some time with little to no reaction from Republicans.  Moreover, it is one thing to say that we should look at whether wealthier retirees should have their Social Security benefits trimmed (or done away with entirely), but it's quite another to say "[T]he national interest depends on everyone, including seniors, making some sacrifice so that the country can make the investments it needs in America's future."  Painting with such a broad brush implies that all seniors, including the millions that rely on Social Security as their sole (or primary) means of income, should have their benefits reduced.  

Moreover, while the authors point out that nearly 30 percent of Medicare spending comes in the final months of a person's life, they say nothing of the demagoguery of Tea Party "death panel" rhetoric or the fact that Republicans in the Senate filibustered Donald Berwick, a respected leader in health care, as President Obama's choice to head the Centers for Medicare and Medicaid Services (he was ultimately given a recess appointment).  Actions of this sort make rational discussion about how to trim the cost of Medicare nearly impossible.  That more than half the state Attorneys General are suing the federal government to block implementation of a health care plan that was initially proposed by a Senate Republican (John Chafee) and would hand private insurers more than 30 million new customers speaks as clearly to the one note obstruction of Republicans every bit as much as the Affordable Care Act's passage without a single GOP vote in Congress.  

Similarly, the book cites the example of Delaware Governor Jack Markell using tax incentives to lure Fisker Automotive to his state and of Intel CEO Paul Otellini bragging that he can "build a factory anywhere on earth but here and get a $1 billion discount."  That's great for Intel, but $1 billion in lost tax revenue has to be made up somewhere and the authors don't come up with plausible explanations for where that gap can be filled or the fact that many U.S. corporations already manipulate our tax code to pay little or no federal tax each year.  

Finally, Friedman and Mandelbaum blow an enormous air kiss in the not-so-subtle direction of New York City Mayor Michael Bloomberg, who, while not named specifically, meets the description of the change agent our system, according to them, needs - a person who balances social responsibility with fiscal conservatism and an eye to the use of McKinseyean consulting efficiencies.  Indeed, were Mitt Romney not twisting himself into a pretzel to be on every side of every hot button issue near and dear to the GOP base, he too might be what the authors think our system needs.  The authors cite prior third party Presidential candidates like H. Ross Perot and Teddy Roosevelt (as a Bull Moose in 1912) as examples of how a third party can give voice to the desires of the populace that are not being met due to the extremism of the two parties.  While there is some truth to this, the argument is not particularly persuasive.  With regard to Perot, while he did advocate tackling the deficit as a third party candidate, so too did Bill Clinton.  Indeed, the very tax increases Friedman and Mandelbaum give credit to helping move our budget toward balance in the 1990s were passed by President Bush and a Democratic Congress in 1990 and by Democratic-only majorities in both houses of Congress in 1993.  So while Perot may have echoed similar themes, it is not true to say he was advocating ideas that were foreign to the two major party candidates.  

Further, another third party candidate cited by the authors, George Wallace, race baited and helped Richard Nixon cleave the Democratic party in the 1960s. This "southern strategy" resulted in an enormous GOP landslide in 1972 and shifted the center of gravity for the GOP to the South, where it remains to this day. That Wallace gave voice to the fears and insecurities of whites during the civil rights era that were co-opted by Nixon is nothing to be proud of and merely illustrates that third party candidates are not some panacea to what ails our political system.  In addition, while the broad strokes outlined in the book make sense - more public/private partnership, greater commitment to educational reform, and others, these ideas cost money, money the authors don't identify in terms of where (or how) taxes should be increased or entitlement programs cut.  Ultimately, this amounts to heckling from the bleachers, not driving for solutions.

Ironically, the "shock therapy" Friedman and Mandelbaum call for would be unnecessary had Republicans in Congress made an affirmative decision upon President Obama's inauguration to work with him instead of doing everything in their power to stop him.  Contrary to the right wing spin machine, Obama's inclination is toward compromise and solution.  What the right has done is pervert that tendency to bend Obama to their will in debt and budget fights and extract compromises that are contradictory to the GOP's rhetoric (extending tax cuts that add to the deficit and debt) or are largely symbolic (minuscule budget cuts that fail to make any meaningful dent in our deficit while shrinking aid to the infirm, poor and needy).  While doing a post-mortem on "how we got here" is beneficial only to a point, the idea that a third party candidate can come in and offer answers that are not already being offered is to ignore political reality. 

If the authors wanted to attack the root of political gridlock, they might have delved into the idea of non-partisan redistricting, public financing of elections or other "good government" ideas that are already widely circulated among the chattering class.  Banning former members of Congress or their staff from working for lobbying firms is another idea that might have been worth exploring.  They might have also looked into the track record of prior Administrations in working with Congress.  Unsurprisingly, the highest level of partisan gridlock has occurred under recent Democratic Administrations (Clinton and Obama) while prior Republican Presidents have not been stymied in that way. 

They could have also been more accurate in their assessment of entitlements.  For example, Social Security is fully "solvent" until the mid-2030s, that is, it can continue paying out full benefits to every retiree until that time.  The only reason that date is not further in the future is that every Congress (and President) for years has raided the surplus (that pesky "lock box" Al Gore wanted never came to fruition) to mask our deficits.  While the Chinese do hold nearly a trillion dollars of our debt, we, the people, hold far more than that in the form of IOUs to Social Security sitting in a vault somewhere in West Virginia (thank you Sen. Robert Byrd).  They also could have pointed out that tax rates in America do little to inhibit the wealth and income of the truly well off.  Tax rates have been as high as 91 percent and now top out at 35 percent, yet in times of exceedingly high taxation and modest taxation, the rich always do well, it is just a question of how well.  That $4 trillion in savings that is being searched for in vain is staring us right in the face -   rolling back all the tax cuts passed in 2001 and 2003 would get us just that amount, but that would require the expenditure of political capital that no one wants to use and the authors do not even mention.  

In sum, That Used To Be Us is a helpful primer in understanding where and how the United States has fallen behind its global competitors.  The book is at its strongest when discussing issues such as educational reform, the critical need for research and development, and innovation taking place in organizations from the armed forces to Silicon Valley.  Unfortunately, the authors stumble when they move beyond anecdotes from far flung parts of the American economy that show our innovation and ingenuity, offer little more than bromides and generalities for answers and completely misread and, in same ways, misrepresent, the current state of our politics.  This book feels like it was cobbled together from old essays and columns wrapped together with some overarching themes that have been circulating for some time and do not come across as particularly original.

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1 comment:

  1. If the author would like to attack the root causes of the political impasse, they may have in-depth study into the non-partisan re-election or other "good government" concept, has been widely circulated among the chattering class the idea of ​​public financing.

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