Adonis Diaries

THOMAS L. FRIEDMAN published on March 13 “Capitalism, Version 2012” (with slight editing):

“David Rothkopf, the chief executive and editor-at-large of Foreign Policy magazine, has a new book out, entitled “Power, Inc.”   It is about the epic rivalry between big business and government that captures what the 2012 election should be about.

And it’s not “contraception”: It’s the future of “Capitalism” and whether it will be shaped in America or somewhere else.

Rothkopf argues that, while for much of the 20th century the great struggle on the world stage was between capitalism and communism, the great struggle in the 21st century will be about which version of capitalism will win, which one will prove the most effective at generating growth and become the most emulated.

“Will it be Beijing’s capitalism with Chinese characteristics?” asks Rothkopf. “Will it be the democratic development capitalism of India and Brazil? Will it be entrepreneurial small-State capitalism of Singapore and Israel? Will it be European safety-net capitalism? Or will it be American capitalism?”

It raises another question: “What is American capitalism today, and what will enable it to thrive in the 21st century?”

Rothkopf’s view, which I share, is that the bargain that most admired and system tried to emulate about American capitalism is precisely what we’ve been ignoring: America’s success for over 200 years was largely due to its healthy, balanced public-private partnership.

Mainly, the government provided the institutions, rules, safety nets, education, research and infrastructure to empower the private sector to innovate, invest and take the risks that promote growth and jobs.

As the private sector overwhelms the public, you get the 2008 subprime crisis.

When the public overwhelms the private, you get choking regulations.

You need a balance, which is why we have to get past this cartoon argument that “the choice is either all government or all the market”

The lesson of history is that capitalism thrives best when you have this balance, and “when you lose the balance, you get in trouble.”

For that reason, the ideal 2012 election would be one that offered the public competing conservative and liberal versions of the key grand bargains, the key balances, that America needs to forge to adapt its capitalism to this century.

First grand bargain is to repair our long-term structural deficit via tax reform: by phasing in $1 in tax increases for every $3 to $4 in cuts to entitlements and defense over the next decade. If the Republican Party continues to take the view that there must be no tax increases, we’re stuck. Capitalism can’t work without safety nets or fiscal prudence, and we need both in a sustainable balance.

As part of this, we will need an inter-generational grand bargain so we don’t end up in an inter-generational civil war. We need a proper balance between government spending on nursing homes and nursery schools — on the last six months of life and the first six months of life.

Second grand bargain we need is between the environmental community and the oil and gas industry over how to do two things at once: safely exploit America’s new found riches in natural gas, while simultaneously building a bridge to a low-carbon energy economy, with greater emphasis on energy efficiency.

Third grand bargain we need is on infrastructure. We have more than a $2 trillion deficit in bridges, roads, airports, ports and bandwidth, and the government doesn’t have the money to make it up. We need a bargain that enables the government to both enlist and partner with the private sector to unleash private investments in infrastructure that will serve the public and offer investors appropriate returns.

Fourth grand bargain should focus on education and health care. We need grand bargains that better allocate resources between remediation and prevention. In both health and education, we spend more than anyone else in the world — with no better outcomes. We waste too much money treating people for preventable diseases and re-teaching students in college what they should have learned in high school. Modern capitalism requires skilled workers and workers with portable health care that allows them to move for any job.

Fifth grand bargain  among employers, employees and government.  In Germany government provides the incentives for employers to hire, train and retrain labor.

We can’t have any of these bargains without a more informed public debate. Bill Gates said to me in a recent interview “The big thing that’s missing in U.S. politics today is this technocratic understanding of the facts and where things are working and where they’re not working,” so the debate can be driven by data, not ideology.

Capitalism and political systems — like companies — must constantly evolve to stay vital. People are watching how we evolve and whether our version of democratic capitalism can continue to thrive. A lot is at stake here.

Rothkopf argues: “If we continue to treat politics as a reality show played for cheap theatrics, we increase the likelihood that the next chapter in the ongoing story of capitalism is going to be written somewhere else.” End of quote

I have My set of Grand Bargain priorities:

First grand bargain: Drop the laws on tax-exempt religious businesses, cancel the privileges that clerics enjoy that common citizens lack, penalize candidates and institutions (private and public) that capitalize on religious “fervor” in order to gain election votes or pressure public institutions…

Second grand bargain: Be candid and make transparent on what capitalism is based on. For example,

1. Keeping 20% of the population poor regardless of surpluses, so that this part of the population keeps maintaining the capitalists interests in low paying-jobs,

2. Inventing preemptive wars in order to capture the surplus in lower middle-class citizens that capitalism claims its inability to absorb in the market place.

3. Appointing a council of 10 members, independent of the government, to investigate financial irregularities in ministries and pinpointing publicly the conflict of interests and biases in public institutions

Third grand bargain in political reforms. For example:

1. Denying the President the right to appoint Supreme Court judges

2. Making election laws fair, affordable, understandable and readable by the common citizen

3. Curtailing the monarchic rights of Presidents

4. Eliminating the incarceration policy of youth in schools for 13 years because they are too virulent for the system to contain their aspiration for change and reforms

5. Setting a cap on upper income and enforcing the concept of reducing inequality image among communities…You may add your alternatives, and they are many…

Note: You may read on private properties https://adonis49.wordpress.com/2010/09/25/part-2-private-properties-can-capitalism-be-reformed/