There are often one or two fairly memorable moments in presidential convention speeches. This was one from Bob Dole back in 1996:
Age has its advantages. Let me be the bridge to an America than only the unknowing call myth. Let me be the bridge to a time of tranquility, faith and confidence in action. And to those who say it was never so, that America’s not been better, I say you’re wrong. And I know because I was there. And I have seen it. And I remember.
Quite lovely, actually. Kind of a “Stop at Willoughby” quality to it. Anyway, Bill Clinton cleverly hung the image around Dole’s neck by saying he would instead “build a bridge to the 21st century.” That was Clinton’s memorable moment. But these days, Democrats are afflicted with the sort of economic nostalgia that Clinton once rejected. Here is NYC Mayor Bill de Blasio on CNBC:
I think we had an experiment here that worked. It was the New Deal. What we’re talking about here is how to get us to some of those same possibilities again through polices that fit these times. I don’t hear a lot of debate on this point. If you take from 1945 through the 1970s, I don’t hear a lot of people saying that that wasn’t a great time for growth in this country, and growth that led far into the grass roots and animated our economy across the board.
Let’s put aside how the immediate postwar era — a time when other advanced economies were recovering from global war — contained key differences from modern America. Also let’s put aside the work of economic historian Alexander Field whose research suggests it was the innovations of the 1930s that “both helped us win the war and established the foundations for postwar prosperity.” Finally, let’s put aside the explosive costs of the New Deal-Great Society, and how those old safety net program need fundamental reform.
Instead, let’s focus on what is best for a 21st century economy lacking sufficient dynamism and whether the supposed stability of the 1950s and 1960s provides a useful model for today. Some thoughts worth considering from Ashwin Parameswaran:
Many of us would prefer that we somehow turn back the clock and recreate the imagined stable utopia of the 50s and 60s. Even if this were feasible, constructing an economy where firms and all their stakeholders are provided with perfect stability is a recipe for stasis and stagnation. It is a solution that, at best, enables us to share s static economic pie in a more equitable manner. Moreover, even this outcome of a static pie is not certain. Dynamic competitive tension and the threat of failure due to disruptive innovation at the level of the firm is not just important to expand the size of the economic pie. It also helps maintain the resilience of the system against unexpected shocks by either enabling the system to maintain critical functionality or to rapidly reorganise to an effective state after systemic collapse.
Disorder also lies at the heart of distributive justice. The collective bargaining power of labour and the share of the economic output that flows to labour increases when the firms that employ them are individually fragile and subject to the constant threat of failure. A competitive free enterprise economy does not equate to the theoretical ideal of perfect competition where no firm earns super-normal profits (also known as rents). It is the lure of super-normal profits that drives the entry of new firms into an industry. No venture capitalist has ever funded a startup that tried to make a market rent-free. A successful new entrant does not extinguish rents, it captures them. What matters is that the incumbent firm earning super-normal profits is subject to the constant threat of losing these profits. The fact that an incumbent firm makes significant super-normal profits does not imply that entrepreneurs and capital as a class do the same. For every successful firm, there are many who fail.
Or as I have put, maximum competitive intensity for business — competitive capitalism not crony capitalism — and a pro-work, fiscally sustainable safety net for us. And accomplishing those goals in globalized, technologically advancing economy will take a lot more than justexpanding the existing welfare state and mechanically trying to mimic the tax and unionization rates of decades past.
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