I've been covering Wall Street and corporate America for going on two decades, and if there's anything I've learned it's that there are really only two kinds of companies: those growing and those shrinking.
The U.S. government today has officially become the latter.
The difference between a growing business like Apple Inc. and a shrinking one such as Eastman Kodak has less to do with spending and revenue than with psychology. Growing companies go through tough times. They adapt, and they're poised to strike when conditions are right. They don't stop innovating.
Defeated companies may be producing steady profits. But they lose their entrepreneurial spirit. They stop looking at the future. They get intimidated. They quit fighting. They look for a sale. They try to buy growth. They play not to lose — and end up losing anyway.
Which of those does Washington sound like?
This has been my fear for a long time. We used to be a bold, "can do" sort of country. We were optimists. We certainly weren't timid. We weren't scared of our own shadows. We weren't already convinced we were defeated, before we'd even tried. We were a nation of immigrants and the descendents of immigrants, people who bravely took a bold step for a better life.
We may have done a great deal that was wrong - we did indeed do a great deal that was wrong, and we don't want to forget that - but we acted. Heck, we even put a man on the Moon - several times! We welcomed immigrants - maybe not always in practice, but at least we believed in the theory: "Give me your tired, your poor, your huddled masses yearning to breathe free." If you were willing to work for a better life, we would give you that opportunity. We would build a better nation together. How old fashioned does that sound these days?
There was always an isolationist streak in America, but mostly, I think, we just wanted to build our own country, our "shining light on a hill," without being dragged into old fights - religious wars, often enough - overseas. But we also created the Peace Corps. We built the best system of public education in the world, bar none. We established Social Security and Medicare. We were not a timid people,...
...Not until now. Now, we just want to retreat. We just want to huddle - apathetic, miserly, and defeated - on the couch. We're not confident enough in the world's first democracy to actually do anything. We consider all government to be bad, pretty much by definition. And we think that's especially the case with our own government. Instead, we want a wealthy aristocracy to watch over us, throwing us pennies here and there, as they see fit - and as we admire them from afar. (I'll never understand America's bizarre fascination with celebrities.)
We consider education to be "elitist," not a worthwhile investment. And we consider the scientific consensus to be just another opinion, no better than anyone else's. We want to believe what we want to believe. But while we used to believe in American exceptionalism, we don't now, not really. We mindlessly parrot that phrase, as if it will magically keep the fear away, but nonetheless, we're certain we can't compete in today's world, so we don't even want to try.
We've become cowards - dispirited, apathetic, superstitious cowards, defeated without ever really trying.
And note that this isn't just on the right, though it's certainly more common there. On the left, too, there's plenty of superstition. There are many on the left who are just as disdainful of science, preferring to just believe whatever they want to believe. And plenty of people on the left don't think we can compete with other nations. These are people who are so certain we'll lose that they don't even want to try.
But they're a minority on the left, whereas the fearful far-right controls the entire Republican Party, lock, stock, and barrel. It's on the right where our cowardice and timidity is most pronounced. It's on the right where we want an aristocracy of wealth, while the rest of us timidly hoard our pennies. It's certainly on the right where superstition trumps science, history, and public policy alike.
But the right also claims that it wants the U.S. government to be run more like a business.
So, what would happen if Apple had to tackle the debt crisis? First, it would eliminate spending that's not working. Then it would make a commitment to spend if necessary. Third, it would look for ideas to spend on. Finally, it would call customers' bluff. How much are you willing to pay for what the government gives you?
Ultimately, what's happened to our government, lawmakers, elected officials and ourselves is that we've have taken on a mind-set of defeat. It doesn't seem to matter that the business model — taxing for revenue, spending for growth — isn't broken. After all, it's working in Germany, Canada, India and China.
We've given up on the model because of our debt situation. It's a problem, and a pressing one. A default or lower credit rating would cause further damage to our credit picture.
But there are really two ways to handle it. We could take a balanced approach of reining in spending and increasing revenue (cutting costs, raising taxes), or we could simply cut, slashing incomes (Medicare, Social Security, the military). These drastic cuts, which will balance annual budgets, are in effect a surrender.
They are based on the belief that revenues (taxes) won't rise through increased business activity, and that taxes can't be raised without scaring the private enterprise. In business terms, management is convinced sales won't be enough to pay the bills and that raising prices will drive away customers.
So what would a bold, optimistic, "can do" sort of America look like? First, it would recognize that government itself is necessary. Private business is also necessary, of course, but that doesn't make government "bad." Just the reverse, in fact. Private business cannot flourish without the civilization government brings. And taxes buy us that civilization.
This is not the same world it was fifty or a hundred years ago, and we can't expect to have the same government we had back then. Like it or not, things change. But as Weidner points out, our "business model" isn't broken. If we've lost confidence in it, lost confidence in ourselves, that's our failing (although, admittedly, after eight years of George W. Bush, it was probably easy to lose confidence in America).
When it comes to debt, there are two sides to every balance sheet. It's not just spending, but revenue, too, that must be taken into account. A bold, growing country expects growing revenue. And a confident people expect everyone to pay their fair share. That means that people who are doing the best, people who should be the most grateful for their opportunities in America, should pay the most.
First, they can afford it. They don't have to worry about paying the utility bill or feeding their children. They can afford to pay more than less affluent individuals. That's just a plain fact. Second, if they've got the most out of living in America, they should be grateful for that, more grateful than people who are doing relatively poorly. They should want to pay their fair share, or even a little extra.
And third, we don't want to create a hereditary aristocracy in America. After all, that's what we escaped in the Old Country, isn't it? And if living on the dole is bad for the poor, why isn't it bad for the rich? If it's a terrible thing for the poor to get a guaranteed income, never really having to work a day in their life (and yes, it probably is), then why isn't it also a terrible thing for rich kids? Why aren't high estate taxes good for everyone?
And then there's the spending side. Yes, politicians will eagerly spend other people's money on their own pet projects. Of course, those pet projects are also ours. For every American aghast at how much money we spend on our military - seven times as much as our next biggest rival, or more than the rest of the world combined - there's probably an American who wants to spend even more. Waste is in the eye of the beholder.
But that's why we have politics, and that's why we must compromise in a democracy. You don't always get your own way, because other people disagree with you. Well,... duh! Unless you're in the Tea Party, how could you ever think it would be different?
But there are things we can do. For example, we can set up automatic reviews of every federal program - reviews which are insulated from politics as much as possible - which would look at whether the program has actually done what it was supposed to do. After all, we keep shoving money at "abstinence only" sex education, despite study after study that shows it doesn't work.
But we should also understand the difference between consumption and investment. Debt isn't always bad. Borrowing money to finance a vacation in Hawaii is probably foolish, but debt isn't so bad when you're getting a mortgage to buy a reasonably-sized home. Mortgage debt isn't always good, certainly, but it's often a good thing, a prudent thing, to do.
And so is investing in a good education. You might borrow money to get a college education, confident that it will be a good investment. Well, likewise, America as a nation should invest in education. We used to have the best system of public education in the world. That was an investment that payed off for our country in spades. But we've fallen woefully behind other countries today, because we just don't want to spend the money. We're just not willing to invest in America anymore.
Well, if we're too stingy, too cowardly, too... defeated to invest in America, we have already lost. That's not the America we used to be. If we're not growing, we're shrinking. If we're not advancing, we're retreating. If we don't recover that old "can do" spirit, we'll continue to diminish, convinced we can't do anything. And that will be the end of America.
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