Barack Obama Economics India

Friedman is annoying, but essentially correct

Tom Friedman apparently spent last week talking to a slew of Indian businessmen – after all, he is in Bangalore – and he found that they were attempting to say something to him, that they were:

trying to make a point that sometimes non-Americans can make best: “Dear America, please remember how you got to be the wealthiest country in history. It wasn’t through protectionism, or state-owned banks or fearing free trade. No, the formula was very simple: build this really flexible, really open economy, tolerate creative destruction so dead capital is quickly redeployed to better ideas and companies, pour into it the most diverse, smart and energetic immigrants from every corner of the world and then stir and repeat, stir and repeat, stir and repeat, stir and repeat.”

The prose and the formulation is Tom Friedman at his insufferable worst. And I think Friedman is fundamentally wrong in his point – America did not get to be “the wealthiest country in history” by acting as Friedman describes. No – we got there by building up our infrastructure, exploiting our vast natural resources, and creating an enormous manufacturing base. Friedman was right about the immigrants part.

The reason we stayed enormously wealthy as a nation after this old manufacturing economy began to be outsourced is our higher education system – and the other stuff that Friedman mentions. 

Which is to say that Friedman’s frustratingly dumbed-down “letter to America” that many Indian businessman are trying to speak to Friedman – is essentially correct in its prescriptions if not it’s history. We cannot have institutions “too big to fail” – and we cannot allow the massive government intervention into the economy to last. (On this though, Obama and Geithner seem if anything overcautious.) We cannot prop up “zombie” institutions. We cannot “protect” jobs – except temporarily. We need to create new jobs. We need smaller and more nimble companies. 

This is what we need to keep our nation strong as we enter the period of the market-state – in which governments will succeed based on the amount of opportunity they are able to offer their citizens.

Frustratingly, I think Friedman – even with such dumb prose – is essentially correct.

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