Monday, January 04, 2010

Dark Skies
This piece by conservative thinker Jim Manzi is getting some attention, including a mention in Ross Douthat's column today. I read it a few weeks back when one of Sullivan's guest bloggers mentioned it, and I agree it's a worthwhile and thought-provoking analysis of some of the "big questions" around the American economic, cultural and political scene. Which isn't to say that Manzi doesn't get a few things really quite wrong, even as he frames the overarching problem well and nails a few of the particulars:

Our strategic situation is shaped by three inescapable realities. First is the inherent conflict between the creative destruction involved in free-market capitalism and the innate human propensity to avoid risk and change. Second is ever-increasing international competition. And third is the growing disparity in behavioral norms and social conditions between the upper and lower income strata of American society.

These realities combine to form a daunting problem. And the task of resolving it turns out not, by and large, to be a matter of foreign policy. Rather, it compels us to consider how we balance economic dynamism and growth against the unity and stability of our society. After all, we must have continuous, rapid technological and business-model innovation to grow our economy fast enough to avoid losing power to those who do not share America's values — and this innovation requires increasingly deregulated markets and fewer restrictions on behavior. But such deregulation would cause significant displacement and disruption that could seriously undermine America's social cohesion — which is not only essential to a decent and just society, but also to producing the kind of skilled and responsible citizens that free markets ultimately require. Moreover, preserving the integrity of our social fabric by minimizing the divisions that can rend society often requires ­government policies — to reduce inequality or ensure access to jobs, education, housing, or health care — that can in turn undercut growth and prosperity. Neither innovation nor cohesion can do without the other, but neither, it seems, can avoid undermining the other.

Manzi edges up to, but doesn't quite explicitly describe, a puzzle I've been noodling over for a few years now: the stark contradiction between Republicans' calls for a radically deregulated economy and for "a return to traditional values." At least if we're talking about low rates of divorce and out-of-wedlock births, it was a lot easier to sustain these things when employment was stable and the fruits of prosperity were more equitably shared. (The irrefutability of this premise is why I think that eventually a political faction we might characterize as "Buchananite"--favoring intrusive regulation in both the bedroom and the boardroom--might gain prominence. It isn't happening now because there's no economic model for such a political party: someone like Sarah Palin, the most obvious leader for such a faction and someone not overburdened by a deep and nuanced understanding of economics or, indeed, much else, is too dependent on big-money support to move in that direction. But someone probably will figure this out sooner or later; maybe this is what the "Tea Party" movement turns into, though right now that too is financed by super-rich a-holes like the Koch brothers.)

Manzi mostly sidesteps this nexus of tough questions (other than an allusion to the Nixon-era blending of cultural pushback and economic interventionism, and Reagan's subsequent political triumph of fusing traditional morality and laissez-faire economics--which was easily sold by the master pol since no experience had yet proven its impossibility) by labeling the Democrats as the party of "cohesion." This is a big oversimplification that I think muddies his whole analysis, but at least lets him move on to the points in which he's more interested anyway.

Fortunately, he's on more solid ground here, noting a cultural schism that poses a significant threat to our long-term well being and, admirably, doing it without recourse to the hypocritical finger-waggery of a crypto-racist jerkass like Charles Murray. Manzi simply asserts, I think inarguably, that some social norms "work" better than others in terms of the life outcomes they tend to generate:

Increasingly, our country is segregated into high-income groups with a tendency to bourgeois norms, and low-income groups experiencing profound social breakdown.
[W]hile affluent and educated Americans are returning to the traditional family model, the poor and less educated are not. The gap between rich and poor today is also a gap in cultural norms and mores to a degree unparalleled in our modern experience. The overall divorce rate, for example, exploded in the 1970s, but has since returned to just about its 1960 level for those with a college education. For the less educated, however, the rate has continued to climb — and women without high-school diplomas are now about three times as likely to divorce within ten years of their first marriage as their college-educated counterparts.

Child-rearing has seen a similar split. In 1965, almost no mothers with any level of education reported that they had never been married. Today, this still holds true for mothers who have finished college: Only 3% have never been married. But that figure stands in stark contrast with the nearly 25% of mothers without high-school diplomas who say that they have never been married. In fact, last year, about 40% of all American births occurred out of wedlock. And about 70% of African-American children — as well as most Hispanic children — are born to unmarried mothers. But this situation obtains for low-wage, non- college- educated whites as well: It is estimated that about 70% of children born to non-Hispanic white women with no more than a high-school education and income below $20,000 per year were born out of wedlock.

The level of family disruption in America is enormous compared to almost every other country in the developed world. Of course, out-of-wedlock births are as common in many European countries as they are in the United States. But the estimated percentage of 15-year-olds living with both of their biological parents is far lower in the United States than in Western Europe, because unmarried European parents are much more likely to raise children together. It is hard to exaggerate the chaotic conditions under which something like a third of American children are being raised — or to overstate the negative impact this disorder has on their academic achievement, social skills, and character formation.

Unfortunately, he can't resist following this insightful observation with an ideologically derived cheap shot: blaming "the welfare state," which "creates incentives that push people toward short-term indolence, free riding, and self-absorption." Other than the descriptor "short-term," this could have appeared verbatim twenty years ago, and it would have made a lot more sense back then. Today's "welfare state" has a very different shape and purpose, as Jason DeParle (author of the superb American Dream, probably the best book ever written about public assistance in America) detailed in an unsettling piece that appeared in Sunday's Times about the millions of Americans whose only current "income" is Food Stamps.

After a bracing and perceptive discussion of inequality that includes an allusion to what I think might be the most disturbing economic trend of the last forty years--the decline in income mobility--Manzi again wallows in his welfare state phobia. This is where I believe he really gets it wrong, badly mischaracterizing the American Recovery and Reinvestment Act passed last February:

The first major initiative of the new president and Congress was the artfully labeled stimulus bill, which will have the federal government spend nearly $800 billion over the next ten years — less than 15% of it in fiscal year 2009. More than a short-term emergency measure, the stimulus represents a medium-term transformation of the character of federal spending — and government action — in America.

Only about 5% of the money appropriated is intended to fund things like roads and bridges. The legislation is instead dominated by outright social spending: increases in food-stamp benefits and unemployment benefits; various direct and special- purpose spending relabeled as tax credits for renewable-energy programs; increased funding for the Department of Health and Human Services; and increased school-based financial assistance, housing assistance, and other direct benefits. The objective effect of the bill is to shift the balance of U.S. government spending away from defense and public safety, and toward social-welfare programs. Because the amount of spending involved is so enormous, this will be a dramatic material shift — not a merely symbolic gesture.

This is misleading, if not actually malicious, in at least two respects: first, "increases in food stamp benefits and unemployment benefits" are explicitly temporary responses to an economic emergency rather than some kind of diabolical plot to revive Big Gummit. That's the "Recovery" part of the ARRA (along with the tax cuts, which had the least stimulative effect and were included in a misguided and failed bid for some Republican love).

The "Reinvestment" part, which Manzi also erroneously dismisses as a move toward "social democracy," is designed as a down payment on human capital improvements, reorienting our educational and job training infrastructures toward a 21st century model. I think there's a case to be made that it was disingenuous to characterize this as "stimulus," since the spending was primarily intended to yield long-term gains. Nonetheless, ultimately this represents a big bet on dynamic capitalism--setting the conditions for economic growth rather than trying to define what it will comprise.

The other piece of Manzi's argument that the Obama administration and the Democratic Congress is steering the country toward a European-style quasi-socialist state is the interventions in the finance and automotive sectors. Again, I think you can take issue with the policy choices, and you can argue that the motivations were political--the direct and indirect consequences of standing idly by while GM and Chrysler died might have been unbearable for the Democrats--but putting it on ideology just seems flat wrong to me given Obama's innate operational conservatism, not to mention the administration's decision not to nationalize the banks when it probably could have early last year.

One problem with a "tour d'horizon" (as Douthat somewhat douchily calls it) such as Manzi's is that when you throw so many points into the mix, the good ones can get lost. So it is here: with some big exceptions--notably his call to avoid "a government takeover of health insurance" (which we did, probably to a fault)--I can at least sort of get behind most of Manzi's suggested agenda going forward. Financial regulation to "contain busts" that would eliminate the current moral hazard problem? Sign me up. Likewise the notion to "reconceptualize immigration as recruiting." He really nails this: "It is hard to imagine a more damaging way to expose the fault lines of America's political economy: We have chosen a strategy that provides low-wage gardeners and nannies for the elite, low-cost home improvement and fresh produce for the middle class, and fierce wage competition for the working class." This is fairly brave for a conservative, though perhaps less coming from a Manhattan Institute fellow than, say, a state senator from somewhere in the southwest.

Even his call to "deregulate public schools" is pretty defensible. I find this tough to argue with, for instance:

In a nation where about 40% of births occur outside of wedlock, many children will be left behind. Nonetheless, schools remain one of our primary policy instruments for enhancing both social mobility and our competitive position. They are essential to the task of balancing innovation and cohesion. To function effectively, though, America's schools need to be improved dramatically. Our basic model of public schooling — ­accepting raw material in the form of five-year-olds, and then adding value through a series of processing steps to produce educated graduates 12 (or more) years later — reflects the vision of the old industrial economy. This worked well in an earlier era, but improvements that might have kept this model up to date have been stalled for decades. We now need a new vision for schools that looks a lot more like Silicon Valley than Detroit: decentralized, entrepreneurial, and flexible.

His call for "a market in which funding follows students, and far broader discretion is permitted to those who actually teach and manage in our schools" is something you're about as likely to hear from very liberal activists as well as conservative think-tank types. Of course, the impact of any educational reform is ultimately limited by how bought in the parents prove to be--which takes us full circle to the point about cohesion at the family and community levels.

It's a mixed bag overall. But these days there are so few attempts from the right to think seriously about the problems we face as a nation and as a society that it seems worthwhile to grapple in good faith with thoughtful pieces such as this one.

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