Make us your home page
Instagram

Economic solutions won't come without finesse, compromise

WASHINGTON — If you step back and look at the big economic policy issues — health care, financial regulation, immigration, education reform, the budget deficit — they appear to boil down to one question: What is the best tradeoff between fairness, stability and social cohesion on one hand and disruptive and growth-inducing innovation on the other?

At its simplest level, this debate comes down to a choice between big and small government, between regulation and deregulation, between European-style socialism and American free-market capitalism.

Jim Manzi provides a perceptive analysis of these trade­offs in the latest issue of National Affairs, a new conservative journal. Best known as a corporate executive and high-tech investor, Manzi began his career in a newsroom.

"We are between a rock and a hard place," he writes. "If we reverse the market-based reforms that have allowed us to prosper, we will cede global economic share; but if we let inequality and its underlying causes grow unchecked, we will hollow out the middle class — threatening social cohesion, and eventually surrendering our international position anyway. This, and not some 'world-is-flat' happy talk, is what the challenge of globalization means for America."

Manzi is concerned that the pendulum is about to swing back too far, that the United States is on the verge of turning itself into France. But the debate, it seems to me, needs to go beyond simply determining where the pendulum should come to rest. Equally important is how effective the two sectors are in delivering all that social justice and growth-inducing innovation.

When investors engage in herd behavior and deploy scarce capital merely to bid up the price of assets, that does nothing to improve economic output or efficiency.

What good is competition if it drives corporate executives to knowingly engage in increasingly risky behavior?

What good is innovation that is used to snooker consumers, mislead investors or subvert sensible regulation?

The question is not simply whether innovation will be "stifled," as the business community likes to suggest, but whether those innovations serve a larger social purpose.

But just because markets have recently failed us does not excuse a free pass to those who argue for tougher regulation or bigger government.

History is replete with examples of well-intentioned regulation that turned out to be easily evaded or resulted in unintended and unwanted consequences. And too much of what passes for vital public expenditure turns out to be nothing more than special interest rent-seeking and economy-distorting subsidies.

And while it is now beyond dispute that labor markets are generating incomes that are increasingly unequal, governments have found it difficult to come up with cost-effective programs that offset those effects.

"An America that wants to keep its global edge cannot neglect the necessity of innovation and growth, any more than it can ignore the necessity of social cohesion and stability," Manzi concludes. The political challenge for the next decade is to strike the proper balance while perfecting the public and private institutions that can deliver on those promises.

Economic solutions won't come without finesse, compromise 01/03/10 [Last modified: Monday, January 4, 2010 7:27am]
Photo reprints | Article reprints

© 2017 Tampa Bay Times

    

Join the discussion: Click to view comments, add yours

Loading...
  1. Report slams Pinellas construction licensing agency and leaders

    Local Government

    LARGO — The Pinellas County Construction Licensing Board mismanaged its finances, lacked accountability and disregarded its own rules, according to a scathing report released Wednesday by the county's inspector general.

    Rodney Fischer, the executive director of the Pinellas County Construction Licensing Board, resigned in January.  [SCOTT KEELER   |   Times]
  2. A meatless burger that tastes like meat? Ciccio Restaurants will serve the Impossible Burger.

    Food & Dining

    TAMPA — The most red-hot hamburger in the nation right now contains no meat.

    Ciccio executive chef Luis Flores prepares an Impossible Burger Wednesday at the Epicurean Hotel Food Theatre in Tampa.
  3. Construction starts on USF medical school, the first piece of Tampa's Water Street project

    Health

    TAMPA — Dozens of workers in hard hats and boots were busy at work at the corner of South Meridian Avenue and Channelside Drive Wednesday morning, signaling the start of construction on the University of South Florida's new Morsani College of Medicine and Heart Institute.

    Construction is underway for the new Morsani College of Medicine and USF Health Heart Institute in downtown Tampa. This view is from atop Amalie Arena, where local officials gathered Wednesday to celebrate the first piece of what will be the new Water Street District. The USF building is expected to open in late 2019. [ALESSANDRA DA PRA  |   Times]
  4. Tampa Bay among top 25 metro areas with fastest growing economies

    Economic Development

    Tampa Bay had the 24th fastest growing economy among 382 metro areas in the country for 2016. According to an analysis by the U.S. Bureau of Economic Analysis, Tampa Bay's gross domestic product, or GDP, increased 4.2 percent from 2015 to 2016 to hit $126.2 billion.

    Tampa Bay had the 24th fastest growing economy in the country for 2016. Rentals were one of the areas that contributed to Tampa Bay's GDP growth. Pictured is attorney David Eaton in front of his rental home. 
[SCOTT KEELER | Times]
  5. Tampa Bay cools down to more moderate home price increases

    Real Estate

    The increase in home prices throughout much of the Tampa Bay area is definitely slowing from the torrid rate a year ago.

    This home close to Bayshore Boulevard in Tampa sold for $3.055 million in August, making it Hillsborough County's top sale of the month. [Courtesy of Bredt Cobitz]