Judging by some of the initial responses, Reed Hundt has succeeded in hiding his progressive agenda in the post even more thoroughly than he does in the book. Perhaps I'm reading my own wishes into it, but I understand this book to be an effort to develop a new set of political alignments around a set of core policies that will improve American productivity while at the same time improving distributive justice.
China here plays the same role as the Soviet Union did in the 1950s and '60s to justify the national highway system, the massive investment in science generated by the space race, and to a lesser extent, as an added justification for the second reconstruction. That is, it is an external threat that provides the justification for investment in core public goods.
The basic structure of the argument is: China will leave us in the dust if we do not adopt a set of strategic policies that will make us a more entrepreneurial, risk-taking society capable of competing in the global knowledge economy. We need, so he argues, to invest massively in knowledge infrastructure, wake up from our ideologically-motivated failure to invest in education, universal healthcare, and a social safety net, and persist in the profligacies of crony capitalism.
At the same time, we cannot assume that the older, New Deal models of achieving these goals--most notably stable union jobs with stable large corporations and significant income redistribution--are the way to go. Instead, I understand him to be suggesting that life-long education coupled with a social and medical safety net should provide the insurance necessary to shift to a much more risk-taking, entrepreneurial culture. Open communications and information infrastructures, targetted antitrust enforcement, and pro-entrepreneur tax policies must complement these changes. We should also reorient our development policies to become more generous, because improved standard of living in poorer countries will provide new, expanding markets for American entrepreneurs, and will also tie these countries to our open system, rather than leading them to greater dependence on, and integration into, the Chinese sphere.
I don't want to try to analyze each component of the book's arguments or proposals on its own merits yet. At this point, I want to locate it in the realm of political ideas in the United States today. One of the more bizarre facts of American political life today is the unholy alliance between libertarians, free marketeers, and “the party of business,” on the one hand, and the party of the fundamentalist anti-science/anti-abortion, the anti-immigrant, and the security-centric factions, on the other hand. This alliance is not really more bizarre or unstable than was the alliance between Northeastern progressives and Southern Democrats was, before it was shattered by the Civil Rights Acts, but it does share that kind of incongruity or internal tension. Some Democrats want to destabilize that alliance by presenting the Democratic Party as no less able to be the Party of God than the Republican party. I think what is interesting about Reed Hundt's book is that it sketches an approach to destabilizing that alliance from the other direction.
In his framing, those who are concerned with free markets, competitive success, and free trade should be concerned with the basic inputs into a competitive nation: a well educated population, living under conditions that encourage risk-taking and dynamic learning and adaptation over time. Those who care about the poor and middle class, who care about assuring a level of security and well-being for individuals and families, should also focus away from particular institutional ways of achieving outcomes: like unions or providing healthcare and retirement security through the regulation of long-standing large firms. They should instead focus on outcomes, and, therefore, on the same set of policies that would also encourage entrepreneurship, risk-taking, and dynamic learning and adaptation over time.
The basic question that progressives need to ask of his proposals is, will they deliver a normatively attractive set of capabilities, in Amartya Sen's terms, to Americans, and will they work. Is a safety net that includes all levels of education and life-long education, health, unemployment and retraining insurance, and disaster insurance, enough if coupled with a basic loss of job security in the old sense? The basic set of questions that people concerned with trade and markets should ask is: will this provide a context of innovation, entrepreneurship, and growth. Is a policy that invests heavily in public goods like education and communications networks, that removes considerations of health insurance from impeding labor mobility, that uses development and aid as a mechanism of increasing the extent of the market going to improve American competitiveness in the face of global competition of the kind we are facing? If the answer to both types of questions is “yes,” then a new common ground can be found.
While the details are different, the basic sense that new, networked forms of organization and action, and the centrality of information to economic prosperity offer new ways of thinking about law, markets, firms, and productivity is increasingly common among people working on the emergence of the networked information economy. We have seen in some of these areas that traditional alignments of left and right, big business and civil society organizations fit poorly, and we have seen some very surprising political alliances both within the U.S. and globally. Perhaps that's why I read In China's Shadow as I do.
It was a very tantalizing tidbit, Yochai, but I cannot figure out if it is meant as a satire on the free-market bent of Hundt, or a clear headed realization that as we cannot eleminate the profligacies of crony capitalism, we could put them to the best possible use in an outcome-oriented manner. This train of thought may lead to a fascinating set of policies.
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