Stay Hungry, America
In light of our recent game of chicken in Washington over the debt ceiling, reading Alan Greenspan's 2007 book, "Age of Turbulence," has been quaint. I had to smile when he wrote about how seriously President Clinton took deficit reduction upon entering office in 1993, since deficit and debt levels back then were seen to be dangerously high but from the present day they seem laughably low in comparison.
I also appreciated Greenspan's treatment of the inherent tension in and yet superiority of capitalism over more centrally planned forms of economy. Capitalism is inherently messy (no one person or entity is calling the shots) and disruptive (every week in America, 1 million jobs are created but 1 million more are destroyed), and of course it produces winners and losers. But it has proven to generate the greatest gains to the greatest number of people, and where it is freest the most people have benefited.
Greenspan explains that the tension in capitalism is that we are simultaneously hungering for more and yet pining for stability. It is the hunger for more that pushes us in ways that not only benefit us individually but society as a whole: when we work hard in our vocations, we are rewarded with promotions and raises and accolades, and our companies and our customers and our society benefit from our extra effort. And yet, the constant cycle of progress, disruption, destruction, and birth creates volatility, in the form of dying industries and lost jobs and outdated skill sets. And so there is tension: the tension to let capitalism do its "creative destruction" thing, and yet to cling to the status quo rather than suffer any downside amidst the advance.
As individuals and as a nation, it is important to be sensitized to those who are most vulnerable to the adverse effects of our economic shifts. These pains are plain to see: the laid off worker, the middle-aged professional who has seen her industry pass her by, the shuttering of factories and entire industries as work gets outsourced or mechanized. It can seem unfeeling and cold-hearted to defend capitalism, let alone embrace it.
And yet capitalism generates gains we can be proud of, too, even if they may not be as easy to see. Without our inherent desire to push ourselves out of self-interest to do better, we would not have the proliferation of products and services that make our lives better. And I'm not just talking about iPads and cable TV stations and hundreds of kinds of deodorant. I'm talking about advances in medicine that allow us to beat cancer and live longer, competitive research grants that lead to astounding discoveries in energy efficiency and mechanical engineering, and even financial wizardry that allows capital to be deployed more efficiently so that businesses of all sizes can grow bigger and create jobs.
We don't even have to travel back in time to see the counterfactual of an economy that has yet to innovate its way to these markers of progress, for we have all too many examples in the modern world of regimes that stifle free markets and exclude entire groups of people from contributing their talents and ideas. The norm for such settings is high unemployment, high disgruntlement among youth, and high volatility.
Or, to use a less loaded example, we all know times in our lives when we (or others) have been hungry and when we have been fat and happy. When people are fat and happy, they get complacent and stagnate, and not only do they suffer but others around them do as well. (Insert a joke about your favorite entitled athlete here.) And when people are hungry, they push themselves and get better, and others reap the benefits of this. (To go back to the athlete analogy, there's a reason "contract year" numbers spike up from the norm.) So, to return to our point, while it's important to tend to the most vulnerable around us, it's also important to make sure that we don't set things up so that people stop being rewarded for pushing themselves to get better. Simply put, when innovation shrivels up, we're all in a heap of trouble.
God bless America for being a place where we can, out of a hunger to do better, innovate our way to more for ourselves and more for our communities. We are unique in the world and in history for encouraging such a mentality, and look at all of our successes, in medicine and entrepreneurship and the arts, that have blossomed from such fertile ground. However the rest of this era plays out, fiscally and geopolitically, let's hope America stays a place where we all can stay hungry and do something new and innovative about it, and let's hope more countries move into such a freedom.