The Real Deal

"Infrastructure" by kevin dooley is licensed under CC BY 2.0.

In the latest edition of Modern Whig Weekly, we urge greater creativity in our economic thinking.

We may not think about it much, and if we do, we may not acknowledge it as much as we should, but most Americans expect their political leadership, especially the president, will in some way manage the economy.

It's not at all an unreasonable expectation. In the first half of the 20th Century, both the theories and practices of economics underwent a profound change as the world modernized. Old ways of doing things were already proving inadequate even before the Great Depression and the outbreak of the Second World War. By the time World War II was over, we were very much in a new world. 

Much of the innovation in the field of economics happened as a result of the New Deal. It's a legacy President Biden harkened back to time and again in his State of the Union address as he exhorted Congress to "finish the job." The economic blueprint he drew would have been familiar to any standard-issue social liberal, especially in the Democratic Party, in the years from Roosevelt to Reagan. 

And truth be told, it's not by any means a bad agenda, at least in broad strokes. Small business and a healthy middle class have proven to be the foundations of general prosperity the world over, ever since Bismarck brought the nation-state into being. Burden sharing has provided social cohesion, or at least minimized social division. Well-regulated markets have performed with notable stability over time, steadily increasing in measures of wealth and value. 

And capitalism has been nothing short of the engine of innovation. The technological breakthroughs and mass production capabilities underpinning the abundant world of today have invariably been tied to the profit motive in one way or another. In that, Adam Smith was right; we've done good by doing well. When we've run into serious trouble, it's usually been because profit has become the only motive.

But it's hard to look at the Biden Administration's economic policy and theory of management and not conclude it's both too much and not enough. 

On the one hand, the use of the regulatory state urged by those to the left of the president -- especially the democratic socialists in the farthest left wing of the Democratic Party -- can, as always, threaten to stifle economic activity in some very direct ways. One perfect example is the failure of the Democratic caucus in both the House and the Senate to deliver on the promise of permitting reform (which is badly needed) made to Sen. Manchin (D-W. Va.) to secure his support for the Inflation Reduction Act. 

Without permitting reform, it will be impossible to truly tackle the challenge of climate change. We simply cannot build enough nuclear plants, or wind farms, or fields of solar arrays, plus all the new transmission infrastructure necessary to make it all work, under the current regulatory burden, at least in time. The more dogmatic progressives may not want to face that fact, but it remains a fact nonetheless.

On the other hand, some of the Biden agenda doesn't go far enough. As important as the CHIPS Act and the Bipartisan Infrastructure Bill are -- and make no mistake, they're both better than nothing -- they're really not much more than big spending bills which push funding through existing channels. There's nothing particularly innovative about them. While they fully embody the New Deal's liberal vision of activist government, they don't approach FDR's level of administrative originality or inventiveness. 

Some may argue that's a good thing, and in some ways they'd undoubtedly be right. But there's also an argument to be made for something beyond the New Deal, an economic model which carefully defines the state's role, establishes the boundaries for the energetic pursuit of capitalist aims, provides social insurance to underpin the health and security of the average citizen and harnesses the creativity of academia.

Call it the Real Deal. 

Fortunately, we have a real-world example of just such a system. In the aftermath of World War II, with Germany divided and in ruins, Chancellor Konrad Adenauer and his Christian Democratic Union created the social market economy in West Germany. Inspired by both ordoliberalism and the economic thought of the Freiburg School, it was designed to create the conditions for prosperity while ensuring that prosperity would be shared by all. 

And it worked. Rhine capitalism has produced a massive middle class, an industrial base built on both small manufacturers and large transnational corporations, and a healthy, stable financial system -- all promoted by a robust government sector run with prudent fiscal policy.

Of course, we need not copy the German system in order to garner similar benefits. Nor should we. Americans are perfectly capable of designing our own unique brand of economic management to suit our own particular needs, including the special role we play as the world's leading democracy. And we already have some uniquely American attributes at hand to make good use of. 

One is a propensity to create public/private partnerships. We use them everywhere: in local economic development corporations, joint ventures between universities and private industry, cooperative agreements like the ones among NASA, Boeing and SpaceX to get to the Moon and beyond. One idea is to create a public/private partnership on a national level to tackle infrastructure and climate change at the same time. 

The partnership would be a new kind of corporation, financed by very long-term bonds, which would involve all levels of government -- local, state and federal -- as well as the private sector and academia in not just modernizing and upgrading, but completely rebuilding our national infrastructure. It would constitute nothing less than a domestic Marshall Plan, with the costs and benefits shared by all, including individual citizens (one proposal has dividends on the bonds being paid out as an annual Infrastructure Bonus in lieu of tax refunds). 

It's certainly an innovative notion. And it's something which can be made to work. There are many other possible wrinkles to consider across the board once we get beyond the dogmatic duopoly of laissez-faire vs. socialism.

But, of course, we still have the dogmatic duopoly of our two-party system to contend with. It's not likely to be capable of such dramatic efforts, especially since there's no sign either one of the major parties is likely to establish a supermajority any time soon. We'll likely have to continue to muddle along incrementally. 

It may or may not be enough. We're certainly going to find out a lot over the next couple years as the bills already passed by Congress kick in. Maybe on their own they're enough of a kick in the pants. And maybe the balance we have in our politics at the moment will accidentally create something along the lines of a Real Deal, at least in a general way. We may stumble into reform. 

Either way, we can at least take heart in the president's old-fashioned call to roll up our sleeves. His faith in America is something we all can and should share, regardless of our individual political leanings. We are, always have been, and always will be a can-do country. The only question ever is whether we'll be a will-do country. 

Odds and Ends 

While we're on the subject of economics, Wharton professor Peter Capelli has an interesting take on what may be driving many of the layoffs we're seeing: There’s a surprising culprit behind mass layoffs, says a prominent management professor at Wharton (yahoo.com) 

For a more detailed explanation, here's his full article: How Financial Accounting Screws Up HR (hbr.org) 

One thing you can fully expect in any Real Deal is the treatment of people as people, and not just entries on a balance sheet. 

Speaking of NASA, we may have found the best evidence yet for abundant liquid water on Mars in the distant past NASA's Curiosity Rover Stumbles Upon Wave-Rippled Rocks Left by an Ancient Lake : ScienceAlert 

Evolutionary biologists think the sloshing around of water was key to the emergence of life on our planet. If at some point Mars had large lakes, or oceans, and something like tides, it's entirely possible something similar happened there (although, sadly, Marvin the Martian is surely long gone). 

Sticking with space for a moment, a long-lost interview with Fr. Georges Lemaître was recently discovered in the archives of Belgium's national TV broadcaster: Only filmed interview with Georges Lemaître, 'father of the Big Bang,' rediscovered after 60 years | Live Science 

Turns out the film was mislabeled and put in the wrong place. And you thought it only happened with classified documents, didn't you.

David French had an interesting opinion piece in the New York Times on his own personal tribalism. It's worth a read: Opinion | ‘Bad Apples’ or Systemic Issues? - The New York Times (nytimes.com) 

In the National Gazette, we covered the State of the Union from another angle: The State of the Union - by The Modern Whig Institute (substack.com) 

And, of course, the Chinese spy balloon: Up, Up and Away - by The Modern Whig Institute (substack.com) 

But apparently, we're not quite done yet: U.S. shoots down second ‘high altitude object’ days after Chinese spy balloon (cnbc.com)

And the Chinese don't seem particularly interested in picking up the phone when things get a little hot (which could be, you know, bad at some point): 'It just rang': In crises, US-China hotline goes unanswered | AP News 

Sometimes there's nothing for it but to embrace the absurdity. 

See you next week.

Kevin J. Rogers is the executive director of the Modern Whig Institute. He can be reached at director@modernwhig.org. ___________________________________________________________

The Modern Whig Institute is a 501(c)(3) civic research and education foundation dedicated to the fundamental American principles of representative government, ordered liberty, capitalism, due process and the rule of law.

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