Last week I attended an industry conference in Atlanta, at which the headline speaker was former Federal Reserve chairman Alan Greenspan. Greenspan was interviewed on the front stage by a CNN finance anchor, Ali Someone-or-Other (not being in the habit of watching CNN, I did not know him at all). The contrast throughout was striking: while the interviewer kept digging for the incendiary soundbite, Mr. Greenspan consistently replied with deep, reasoned analysis that displayed a level of historical perspective too often lacking today. For example, when asked a question about the housing boom and emerging slump, Mr. Greenspan began his answer by outlining the economic effects of the fall of the Soviet Union. And as he made clear in his answer, one cannot try to understand the current interest-rate environment without going back at least that far.
Ali asked if oil speculation posed a threat to the economy. Greenspan replied that the speculators were doing a great service, by building up large inventories of crude oil that would otherwise not have been available to mitigate shortages. Ali asked if hedge funds were dangerous and needed to be tightly regulated. Greenspan instead spoke highly of hedge funds, calling them "the pollinating bees of Wall Street" and crediting them with turning inefficient economic niches into efficient commodities. And on and on it went.
Noteworthy was the exchange on Social Security. When asked about the problem with Social Security, Mr. Greenspan replied that there was no real problem with Social Security: we know how much money there is, we know how many people there will be, and we know how much the shortfall is. He said, "I'm a Republican, but I could sit down in a room with Bob Rubin [i.e. Robert Rubin, Treasury Secretary under President Clinton] and we could solve the problem in fifteen minutes. And the first ten minutes would be spent reminiscing over old times."
The problem was not one of numbers, he said, but of the lack of political will. (Neither party really wants to ask Americans to tighten their belts, which is what the situation demands: either more taxes, smaller payouts, or a radical restructuring that would cause great trauma in some form or another.) The real problem was not with Social Security, but with Medicare: "We have made promises we don't know if we can keep." Not only because of the ballooning expense of medical care—we don't know if there will be enough hospitals, doctors, or nurses to provide the necessary services. And the government is only halfheartedly trying to figure out exactly what it has promised, even as it piles on more promises on top of the ones already made.
The most serious problem Mr. Greenspan pointed out was the catastrophic failure of our schools. He noted that at 4th grade, our students score near the top of the world in academic achievement; but by the time they reach high school, American students rank near the bottom of developed nations. This is the cause of our shortage of doctors and scientists; it is also the cause of the stagnation of low-skill wages, as students who by rights should have been prepared for technical careers must settle for low-skilled work instead, glutting the labor market.
Yet very little is done to actually improve our schools. Teachers' unions fight tooth and nail against the expansion of charter schools, or any substantive reform of the school bureaucracy, and instead loudly moan for more money. This despite the worst-performing school district, in Washington D.C., also being the most lavishly funded. The problem is not one of money; it is of institutions. And Democratic politicians especially are too deeply indebted to the teachers' unions to dare cross them.
(One notable exception is the Democratic mayor of Los Angeles, Antonio Villaraigosa. I'm not sure if I agree with a city takeover of the school district in the abstract, but it will surely do a great deal of good in the concrete. And I particularly enjoyed the panicked howling from the teachers' unions.)
Something is very wrong with our politics when the most damaging and obvious problems are never addressed, while relatively minor problems are built up into bogeymen. A part of this is from the "gotcha" mindset typified by the CNN interviewer, who was more interested in creating controversy than in reasoned analysis. (To be fair to him, he was quite a skilled interviewer. But still a narcissistic lightweight.) Our politics is less about improving the country than it is about scoring points off of the other guy. Witness the hyperventilating over Rep. Foley's famous emails, a subject which (while sordid and reflecting very poorly on his character) has nothing at all to do with government policy.
Yesterday on a local radio program, Larry Mantle's "Airtalk," Kevin O'Leary proposed a new political institution to help remedy this malady. Borrowing from the Athenian system of democratic assemblies, O'Leary proposed that each Congressional district should select by lottery 100 citizens, who would participate in a citizens' assembly for two years if they accept the appointment. There would thus be 43,500 such average-joe assemblymen, who would debate the issues of the day away from the backbiting of Washington. Read his website for a summary; I have a few issues with the idea, which I brought up in a phone call to the show, but it has a great deal of potential to get the government focused on doing its job again. (You can listen to the segment, as of right now, by going here, scrolling down to Tuesday, October 24th, and clicking on the "Saving Democracy" audio.)
At any rate, we as citizens need to muster the will to break out of the petty morasses of the moment and consider the difficult questions that matter most. The laws of economics cannot be ignored by the political class forever.
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On another note, Michael Barone writes about a private interview he and seven other columnists had with President Bush earlier today. The hour-long audio of the interview is posted, and makes for fascinating listening. The President began his remarks sounding stilted and uncomfortable, but loosened up considerably as the interview wore on. If you have any interest at all in the thoughts of the most powerful man on Earth, take a listen. This is not the fabled Texas cowboy by any means. (Much as he would like to be sometimes; listen especially to his comments about Syria!)
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