Surely You're Kidding, Mr. Friedman
It amazes me how people continue to view the Friedman Twins (Milton and Thomas) as gurus. Milton's gospel of deregulation left the foxes guarding the henhouse (We tried that once, you know. It resulted in the 1929 Crash. And now, rewind and replay.) and resulted in our current mess. Brilliance.
And Thomas? Well, today's editorial is just too typical. He condemns giving money to auto manufacturers and advocates giving it to venture capital firms that will then finance bleeding edge technology that will save the economy from its current free-fall. Uh huh, pull the other one.
Let me make it clear that I have opposed the bailouts from the start, and I'm no fan of the Big Three. I've always thought that, if the government wanted to throw money their way, it should take over their pension funds, thus keeping a pile of retirees off the welfare rolls and making it easier for well-managed auto companies to buy them out. But Thomas's approach is just noodles.
First, another "New Economy" theory? Please. Remember 10 years ago when we were all being told that the Dot Com Boom had changed all the rules? Turns out it hadn't. And none of the innovations Thomas is banging the drum for now will change them either. New tools? Yes. New rules? No.
Second, just what kind of crystal balls do you think the venture capital people have, Thomas? I remember reading one of the tech tabloids that were all around Seattle during the Dot Com Boom and looking at a cartoon of a scruffy teenager announcing that he had created a website for his cat and then watching the suits line up to dump money on him. It was about that bad. And of course the VC people also made the real estate bubble possible. Let's just say they haven't proved infallible in locating long-term investments.
Third, and here's the kicker, your economy isn't even real, let alone sustainable, if all it produces is electrons and documents. We have a textbook case in the United Arab Emirates right now: Dubai and its "New Economy" are having to be saved from ruin by Abu Dhabi and that dirty, old school dinosaur stuff it pumps. If you want an economy that lasts more than ten years, you need to make stuff: food, tools, stuff you can touch, stuff you can pick up, and yes, stuff you can drive around in.
Problem is that the US (and the UK for that matter) has gotten pretty weak in the "making stuff" department. You see, in order to make stuff, you need people who can make stuff. You need pattern makers and tool-and-die operators and folks like that. We haven't been paying attention to that, though. While Europe and Asia were making sure of their next generation of engineers and lab technicians and skilled trades, we were making sure we'd have an endless supply of lawyers and investment bankers. The closest anyone got to science was computer programming, which amounted to little more than retraining classes teaching people to cut and paste code someone else had written. Everybody in the US was going to work behind a desk. Not possible. Not even desirable. All those desk jobs can be moved to Mumbai with the push of a button. Which Thomas has argued is a good thing.
And so here we are, needing to make things ourselves because we can't afford to buy them any more, and we've nearly forgotten how. Meanwhile, Thomas drives his Lexus past the olive trees on his way to an exclusive country club outside Calcutta, oblivious to the slums he passes and to how they are reflected more and more by the spreading slums back in the US.