The professional left in America and their chattering-class
useful idiots have followed a consistent pattern for a century:
sympathizing with tyranny in their musings over how to implement
policies fueled by jealousy and an undying fear of economic
liberty.
There has hardly been a better example in recent years
than Andy Stern’s Wall Street Journal December 1st op-ed
entitled “China’s
Superior Economic Model.” In his article, Stern approvingly
quotes Intel Corporation co-founder and former CEO Andy Grove who
stated in a 2010
Business Week article that there is “emerging evidence
that while free markets beat planned economies, there may be room
for a modification that is even better.”
Before getting to the details of why Mr. Stern, until
recently the head of the Service Employees International Union —
which spent at least $27 million to help Barack Obama get elected
in 2008 — is wrong in almost every detail, can I take you back
more than two decades to the “Japanese Miracle” (and American
near-panic) of the 1980s?
As someone who was studying economics in college in the
mid-1980s, I endured countless comments about how American
corporations’ narrow focus on “next quarter’s earnings” (as if that
were true) was congenitally inferior to the longer-term view
supposedly taken by Japanese companies.
Over the next several years, the Japanese bought
Rockefeller Center (from my alma mater, Columbia
University), CBS Records (purchased, renamed, and still owned by
Sony), and the famed Pebble Beach golf course.
Harvard professor Ezra Vogel published (actually in 1979)
a book called Japan As Number One: Lessons for America, in
which he argues, as a reviewer for the
Economist magazine put it, “that the United States
should give itself a political and cultural heart transplant. A
more competitive America, he says, needs a much stronger
government, an elite civil service composed of ‘the ablest young
people of their generation’ and a White House staffed by these new
mandarins.” Not surprisingly, given the natural human impulse
toward ego-boosting, Professor
Vogel’s Harvard web page (which makes no mention of his ever
having studied economics) notes that the book “remains the all-time
best-seller in Japan of non-fiction by a Western author.” (Whether
this points to Vogel’s ego or the egos of Japanese readers I shall
leave to your determination.)
In 1995, the Mitsubishi Group, which had purchased
Rockefeller Center, forced the project into Chapter 11 bankruptcy,
losing nearly two billion dollars for their efforts. And a few
years later, as Golf Digest’s Mark
Seal put it, when Peter Ueberroth put together a group to buy
Pebble Beach for less than the Japanese had paid for it, the deal
“bankrupted a Japanese boom-time golden boy, and, most recently,
sent an army of Japanese bankers back home with little to show for
their seven years of superlative stewardship but their good
names.”
Since then, Japan has turned in not just one but two “lost
decades” with its persistent near-zero interest rates frequently
being described as “pushing on a string.” According to a recent
Heritage Foundation study, “In 2010, the Japanese economy looks
to have been smaller than it was in 1992, an incredibly poor
result. It is not just a matter of a decline in output; it is also
a remarkable decline in total wealth. In 1991, excluding
micro-states like Luxembourg, Japan was the fourth-richest country
in the world as measured by GDP per capita. In 2010, it was no
longer in the top 20, was below the OECD average, and would have
likely fallen further but for Europe’s own economic
troubles.”
So when you hear people — especially non-economists with
political agendas — long for the statism that characterizes most
of America’s economic competitors, listen with great
skepticism.
Now, back to the two Andys.
As you read Mr. Grove’s article from which Stern gathers
inspiration, it is worth noting Grove’s political bent: A search of
Andy Grove’s political donations shows a distinct left-leaning
bias. Other than small donations to the presidential campaigns of
John McCain and Rudy Giuliani during the 2008 cycle , his only
contribution to a Republican in the past decade was to Arlen “I
lost my last election as a Democrat” Specter. (The McCain and
Giuliani donations combined were less than Grove’s gift to Barack
Obama’s presidential campaign.)
Grove argued that America is good at startups but bad at
scaling up and thus bad at allowing a new technology company to
jump from a few guys in a garage to something that employs hundreds
or thousands of people. Yet he makes no attempt other than looking
at labor costs to determine the cause of this problem and instead
simply assumes that since China creates more technology
manufacturing jobs than American does, it must be the fact that
China’s government is more involved than the U.S. government in a
“strategic role setting the priorities and arraying the forces and
organization (necessary for job creation).”
Could it instead be the massive regulatory burden imposed
on manufacturing companies and the uncertainties created by our
government, such as whether Barack Obama will get his wish and
cause “electricity rates [to]
necessarily skyrocket”? And if all that weren’t bad enough, who
would risk any business growth that might subject management to
dealing with unions and the true tyrants at Obama’s National Labor
Relations Board? Really, if you were going to start a business that
would be likely to hire a thousand or ten thousand workers,
wouldn’t you go out of your way to avoid people exactly like Andy
Stern?
Grove, refusing to understand how the global market works
rather than how he wants it to work, then turns to the left’s
cure-all: he calls for “an extra tax on the product of offshored
labor” and adds, “If the result is a trade war, treat it like other
wars — fight to win.”
But Andy Grove forgets that wars come at great cost, even
to victors — which it is far from certain we would be despite Mr.
Grove’s tough talk.
In a solid refutation of Grove’s article that ran in the
subsequent edition of Business Week, Vivek Wadwha responds
to the former Intel CEO’s trade militarism: “The problem is that
American companies will be the first casualties in such a war, and
American jobs will be lost. There is no way to win.”
Andy Stern claims that “the past few weeks have proven Mr.
Grove’s point,” but offers no further evidence than the words of
Secretary of State Clinton, Mitt Romney, and President Obama, each
of whom is playing a populist tune for political purposes. Stern
restates the tired claim that our government needs to deal with
“China’s currency manipulation” even though actual economists
recognize there is a legitimate case to be made that
the Yuan might be overvalued rather than undervalued. Nothing
like the Asian bogeyman to scare politicians into xenophobic,
economically destructive, but broadly popular acts that will most
hurt those in the population most likely to support them — those
with the least economic education.
Stern talks with envy about Chinese plans for a long-term
seven percent growth rate. The Middle Kingdom may or may not carry
that off, but when you’re starting with the better part of a
billion people in poverty, it shouldn’t be that hard to do. What
Stern neglects to mention is that the policies that have already
moved out of poverty more Chinese than the entire population of the
U.S. were changes directly away from the central planning that so
failed under Chairman Mao yet which unions still champion —
because they know they will be able to manipulate politicians to
help unions rather than workers or customers.
Stern is at his most aggressively Marxist when he says
that the “free-market fundamentalist” economic system “is being
thrown onto the trash heap of history in the 21st century.” He says
that capitalism is “empirically failing” simply because China and
other rapidly developing nations have a higher growth rate than the
U.S. does. But there are plenty of poor nations on earth to compare
and the real empirical evidence is the incredible correlation
between economic liberty and national prosperity.
As Professor Jacques Garello explained in an
excellent 2004 speech, “freer countries are always more
developed” because more freedom brings more private (especially
foreign) investment, more knowledge, more entrepreneurial spirit,
and the development of human capital. If Stern thinks China is
failing now, he should do a little studying on what it was like
when it had more of his so deeply desired
planning.
Andy Stern is of course not alone in his desire to be more
like China — even though others wonder whether China
is the next Enron. The best known Sinophilic navel gazer is
New York Times columnist Tom Friedman. In his 2008 book,
Hot, Flat, and Crowded, and in
subsequent interviews Friedman said he wished the U.S. could be
“China for a day” so that we wouldn’t have to go through the messy
process of representative government. Rather he would like us to
“launch a green revolution” through totalitarian fiat. Isn’t that
always the way of the left? The ends justify any means. Friedman is
so enamored of the idea that he called it “a fantasy.” And this is
a thought leader of the “moderate” part of the American
left?
In January, 2010, Friedman
disputed Mr. Chanos (of the China-as-Enron theory), saying that
he was “reluctant to sell China short” because “[a]ll the long-term
investments that China has made over the last two decades are just
blossoming…” In the nearly two years since then, the Shanghai Stock
Exchange Composite Index has fallen 25 percent. (The U.S. market is
up about 10 percent during that time.) When “deep thinkers” start
talking markets, hold on to your wallets.
Andy Stern believes that “it is troubling that we [the
United States] have no plan…for growth and innovation.” If the
disastrous first three years of the Obama Presidency have proven
anything (although FDR and Europe proved it first), it’s that there
are few things more dangerous than a politician with a
plan.
Mr. Grove should know better than to cheer for a trade
war, but seems not to. Tom Friedman’s elitist cocktail party bubble
prevents his approving of any system that doesn’t put our betters
in charge of our lives. Andy Stern may know that he is spouting
economic nonsense, but he doesn’t care; his motivation is purely to
bolster union coffers and Democrat politicians, if you will permit
my redundancy.
As Vivek Wadhwa put it so well in refuting Andy Grove’s
ill-conceived call for tariffs, “There is no doubt that the U.S.
has reason to worry about its competitiveness. China, India, and
many other countries have learned the secrets of America’s success
— its open economy and capitalist ways. They are trying very hard
to become like us. Let’s not become like they used to
be.”
