Thomas Friedman’s “Optimism”

September 21, 2011

I read a rather unflattering review of Thomas Friedman’s newest book “That Used to Be Us” in today’s WSJ. I have not read the book, nor do I plan to. I read the bulk of “The World Is Flat” several years ago and decided I had had enough of Mr. Friedman. That said, I want to share this paragraph from the review in today’s paper:

If the authors’ frustration [with America as it is today] is unoriginal and ill-defined, their optimism is terrifying. America will rebound—we will become the us that we used to be again, you might say and Mr. Friedman does—when we regain our ability to do “big things” through “collective action.” Collective action is a phrase that means “the federal government.” Among the big things that we will do are rework American industry, through regulation and taxation, to drastically cut carbon emissions. Another one of our big things is a big increase in the gasoline tax. We will also impose on us a new big carbon tax. We will use revenues to create a “clean energy” industry with millions of “green jobs” like the ones that were eliminated earlier this month at Solyndra. Readers will wonder, like the early environmentalist Tonto, “What do you mean ‘we,’ kemo sabe?”

I hope that’s not the future of America.

5 responses to Thomas Friedman’s “Optimism”

  1. Heh. You know, I find your distate for Friedman amusing because it was actually reading “The World Is Flat” that singly made me believe that capitalism is good for the world. Reading that book actually changed my mind about a lot of things, probably in a more conservatie, business sense. Regression to the mean!

  2. Anna,

    Good point. That said, what are we to think when we read the above paragraph? Clearly, taxing certain things in order to create other things is not capitalism. Perhaps Mr. Friedman has changed his mind with regards to capitalism.

  3. “Clearly, taxing certain things in order to create other things is not capitalism.”

    Probably the #1 best reason why we should have a flat-tax system w/ NO deductions. If you allow a _single_ deduction, then you will allow another, and another, and eventually end up with the mess that our tax-code is today.

    As for regulations: you need them. Unregulated Capitalism would not be a good thing (see Tragedy of the Commons). However, too many regulations strangle capitalism. You need a very careful balance.

    And of course, none of the types of regulations that only benefits a single company (or industry) at the expense of all others.

  4. The WSJ comment is interesting. I agree that taxes to build an industry isn’t capitalism. That’s trying to use fiscal policy to affect/leverage personal behavior. Despite being a solar advocate, and a product of an academia that depends to a disturbing extent on federal dollars, I don’t really think that is the right way to do things. Though it is an interesting discussion to have! How to incentivize behavior is a fascinating, unsolved, problem. (And of course, who gets to define “the good thing” we want to incentivize!)

    But my own personal life experiences have guided me to less antipathy to emissions/carbon regulation than I might otherwise think. As a child growing up in Los Angeles, every day in the newspaper, next to the temperature, they published the Air Quality indices. There were many days, sometimes for weeks or months at a time, where going out during the day (eg, during the summer) was not recommended. The number of days when levels are this high has dramatically dropped since then. This is largely due to the emissions regulations that CA enacted (and other states where able to choose) post the passing of the Clean Air Act.

    So, how does this fit in with my opinions of capitalism? The goal – the *job* – of corporations is to increase profitability and shareholder value. This is good! When they do this, they are doing their job. People , in net, benefit when (public) corporations make money (there are a million and one edge cases, but let’s ignore those). So , when CA enacts legislation that makes companies (car companies then, energy companies now) spend more money, they complain – and rightfully! But as I see it, no company *on their own* chooses to do this because it is doubly not in their interest, both since it immediately costs them more money, but also in that their competitors now have an advantage over them. No one chooses to hobble themselves in a race.

    But when you regulate in these fashions, you have a level playing field. *Everyone* has the same weight tied to their back, so they are still competing at equal handicap. And I get more days when I can see the mountains and don’t have to worry about the particulate matter I breathe. From 1970 to 2000, California’s population went up 70%, the number of cars almost doubled, vehicles miles travelled went up 2.5x…and total NOx and hydrocarbon emissions dropped from 1.6 millions tons/annum to 1.2 million tons/annum. (ref: ) This improves my life *every day*. Having “costs” written into “regulation” in my mind is a way of correctly “pricing” these effects.

    As BG says, finding the line between curbing some excesses of capitalism without strangling growth is the sticking point, not whether we should have any regulations at all. (And I do mean “strangling” not “slightly retarding”)

  5. Well said anna! And you gave a great example of the ‘tragedy of the (unregulated) commons’. It is not in the interest for any single company (or individual) to strive for clean air, since it is _unprofitable_ to do so. A company can make much more money being ‘dirty’.

    Hence you need a regulation to preserve the “common” resource (the air in this example).

    Another example of this type of regulation is the one that limits fishing, so the fish population isn’t wiped-out and the entire fishing industry destroyed. It is in the best interests for everyone to preserve the fishing grounds, but it is not in any single companies interest to limit _their_ fishing (alone) — as that would be unprofitable.

    Regulations that protect a _common_ resource is good. Regulations that protect a (single) company’s profits: bad.