Let me put this out there for comment and improvement

American power depends on American investment and economic growth

KEVIN RUDD, President of the Asia Society and former Prime Minister of Australia has published a very insightful assessment of the growing threat of Chinese power. China has the world’s largest population, a growing economy, increasingly sophisticated military, and clear designs on becoming the dominant world power. I would supplement his analysis with the classic study by Paul Kennedy, The Rise and Fall of the Great Powers: Economic Change and Military Conflict from 1500 to 2000. It’s a stunning book, first published over thirty years ago, that continues to have crucial implications for contemporary security. Kennedy related the projection of military power to each country’s economic base. Countries won’t have the military to defend themselves without the economic base to support their military. Without a strong economic base, they’re also unattractive trading partners and their ideological positions are more likely to seem like losers. In other words, Kennedy’s basic argument was right: the economy is crucial.

But in recent decades, America hasn’t been able to sustain the determination to rebuild and improve its infrastructure. Our investment in fundamental science and technology are no longer unrivaled and we have to invest and compete just to keep up with China. But in fact the date show that American innovation and productivity have been “sputtering” as described in the Harvard Business Review.

Crude theories of economics, spouted by conservative politicians, suggest that business will do all that’s needed, if government would just stay out of their way and lower their taxes. The tax argument is nonsense – there’s been no lack of capital and tax relief goes where the recipients choose to spend it, whether at home or abroad, for research or for bigger houses and boats. Actually, incentives for academic, corporate and public investment differ and the integration of all three are crucial to rebuilding a productive American economy. Public investment is crucial where it is unclear who is going to benefit or who will develop and market the technology. Academic institutions play a crucial role in basic research. And the melding of all these efforts is crucial to continued American leadership. Greatness and leadership aren’t things we own; they are continuing set of choices. We can be great; but we are not predestined for it if we assume its inevitability.

Plus, we need to stop blocking immigrants. Yes, we must make sure that there are opportunities for everyone. But America’s growth as an economy and its preparation for world power were all nurtured by the growth of our population, the welcome for people who wanted to improve their lives. It’s not about who’s better; it’s about the benefits of scale – more of us with more hands, ideas and needs nurture the American economy, American innovation, American business, from all sides, as workers, producers, business owners, and entrepreneurs. By closing American borders, we are stunting America’s future.

Democracy and Public Investment

What democracy can do is obscured by today’s free market, anti-regulatory, anti-government rhetoric. That rhetoric creates real winners and losers, but taking it at its word, it’s based on an everyone-for-him-or-herself form of individualism. It asserts that our successes and failures are almost solely the result of our personal abilities and denies that what we accomplish always rests in part on what society gives us.

That flatly contradicts reality. This country blossomed because we worked together, with a spirit of cooperation. Cooperation that made associations, large businesses and elective government possible.

Everyone-for-him-or-herself-alone ideologues shouldn’t blind us to the public role in development. America’s Founders knew they needed government. As aptly described in the show Hamilton, Alexander Hamilton, Robert Morris and their colleagues understood the importance of a banking system and had government create it. Across the thirteen original states, Founders used government to open transportation to the west. Washington himself was deeply involved in efforts by Virginia and Maryland. When New York, which had a sea level path to the interior, finally built the Erie Canal, it set the path for industrialization and settlement for a century and a half, and made the North into the powerhouse that won the Civil War.

Today we’ve lost a shared sense of the public investments necessary to continued development, and the foundations of American success are falling apart. Bridges take unsuspecting occupants into the rivers and ravines below. Water systems deliver lead, mercury, and an armory of toxins. Sewage systems poison rivers, people and the living things that depend on them. Trains crash for lack of decent equipment. The electronic grid barely carries ordinary loads. The next solar storm can take the electrical and internet grids down, bringing the country to a lengthy stand-still. American colleges and universities have been the envy of the world but stripping their resources will ensure their replacement abroad and with them the R&D that has been central to American leadership. We are the wealthiest of countries but too cheap to fund our infrastructure, terrified that taking care of America would actually put people to work, or that public spirit in building and rebuilding America will help someone else’s business.

The best stimuli for business are investments in the capacity of the public, infrastructure for getting things done, and rules that create a common floor of good behavior. The idea that everything depends on lowering taxes is pure garbage from people who want their winnings the easy way – by taking them away from the people.

Trump promised to put infrastructure in his budget. It’s hard to know whether he’ll keep that promise, whether enough Republicans will follow him, or whether it would include anything more than a wall on the border or brick and mortar repairs. Public investment could make infrastructure better and more resilient, as so dearly needed in Puerto Rico and on the coasts. Public investment could go well beyond controversial minimum wage laws by offering decent, useful, jobs at livable wages. Public programs could improve the private market by creating a model to compete with, like the public health care option that Obama tried to get.

Madison, Hamilton and their contemporaries had a much more patriotic and mature understanding of what American progress depended on – the people, the whole people, not just a few plunderers appropriating for themselves what should be our birthright.

— This commentary was broadcast on WAMC Northeast Report, Jan. 30, 2018.