American Interests: Fukuyama, Mead, and Fiscality

I’m excited to see that Francis Fukuyama has returned to blogging at The American Interest. A friend recently asked me what my major sources of news were, and I responded that I was a big fan of Walter Russell Mead, who maintains an active blog, also at The American Interest. Combine Fukuyama and Mead with the site’s other interesting bloggers – name and name. In an age where what Mead calls “legacy media” – huge conglomerates like CBS, NBC, ABC, CNN, and Fox News – employ huge resources for junk-food coverage of non-events like the Iowa caucuses, it’s tremendously refreshing to see smart people breaking down issues of real relevance: domestically, how pension and medical costs can be reigned into control and how technology can be sensibly used to improve education, public administration, and business; abroad, how the United States will develop partnerships and friendships in Asia to thrive in the 21st century.

Francis Fukuyama: Idea Man, Intellectual Historian, Blogger?

More specifically, some of Fukuyama’s recent stuff (not all of which has appeared on his blog) has been really exciting. More ambitiously, a long essay entitled “The Future of History” appeared in Foreign Affairs a week or two ago. In it, Fukuyama made the observation that in spite of the global financial crisis and skepticism over the capitalist system (rising concerns over income inequality, the Occupy movement, etc.), there’s basically been no left-wing ideological mobilization to take advantage of these circumstances. Look to the cornfields of Iowa, or the snowy primary fields of New Hampshire today, and you’ll find legions of Ron Paul supporters claiming – energetically if nothing else – that everything would work itself out if only the US federal government stopped “interfering” in everything.

Their arguments about why laws forcing you to wear a seat belt constitute tyranny may not be terribly compelling; but they represent the continued hegemony of right-wing, libertarian economic ideas as the only plausible way forward. What the Trans-Atlantic Left seems to have to offer is … what precisely? The eloquent historian Tony Judt marshaled a plea for a renewed social democracy, but from Athens to Philadelphia to California, many of the institutions that characterized this vision (public education, pensions for state workers, a humane correctional system) appear to be collapsing under their own weight.

This will be our Waterloo!

Or visit your local English or Comparative Literature department, and you will find someone telling you why Antonio Negri, or Judith Butler, has the answer for how patriarchy, misogyny, and domination are at the root of our present troubles. But good luck explaining that vision to, or finding a sympathetic audience among, middle-class Americans who do most of their shopping at Costco, not the local college town organic deli. The lack of an effective counter-narrative to the “globalization lifts all tides” one that books like The World Is Flat represented is not only an issue for political strategists, Fukuyama underscored. It constitutes an emergency, he argues, since “the current form of globalized capitalism is eroding the middle-class social base on which liberal democracy rests.”

Fukuyama speculates later in the essay on what some of the characteristics of a new politics might look like. It would have to assert “the primacy of democratic politics over economics,” while also not denouncing capitalism and accepting globalization – but as a challenge and opportunity, not an “inexorable fact of life” out to gut the American middle class. It would have to mount a fundamental criticism of modern neoclassical economics, overturning or at least challenging the supremacy of measures like GDP, or “the sovereignty of individual preferences.” It’d have to “note that people’s incomes do not necessarily represent their true contributions to society.” It would have to be populist and nationalist, albeit in a sophisticated way that recognized the reality of globalization and criticized money politics – in other words, neither “Buy American!” or Freedom Fries will cut it. It would have to involve jettisoning much of the intellectual garbage produced by left-leaning academia in the last three decades, none of which has been successful “as either conceptual frameworks or tools for mobilization”: postmodernism, multiculturalism, feminism, critical theory, and other trends “that are more cultural than economic in focus.”

Perhaps most critical to this new intellectual consensus is something that Fukuyama later expounds upon in his first blog post is the reform of public administration and the public sector, taking in everything from education to public pensions to health care to prisons to national parks. But Fukuyama isn’t just trying to disguise a new social democratic program here. Rather, he insists that Americans have spent far too much time and energy arguing about what public policy should be, in the process not devoting enough time to how that public policy gets enacted. “The biggest problems we face in contemporary governance,” he writes, “are often not related to what the government should do, but rather how actually to get the existing machinery to implement a policy that everyone can agree upon.”

For his example, Fukuyama brings up, by way of the Stanford professor Scott Rozelle, an initiative in rural China to force schoolkids to take daily vitamin pills to improve their health and academic performance; the health benefits of the pills were beyond doubt and there was no safety risk. But local principals gave out eggs (lacking in iron) instead. Parents refused to comply. Students drooped. And this all happened “in an authoritarian country where everyone assumes the government’s orders will be obeyed.” Find a way to reform governance so that parents actually view it as in their interest to comply, and where even the crankiest principals will give out pills not eggs, and that’s a winning proposition, writes Fukuyama.

China's major domestic policy challenge for educational reform?

Much of what Fukuyama is writing here is quite similar to what his The American Interest colleague Walter Russell Mead has been writing on for years under the rubric of “the blue social model,” so-named because it’s how “Big Blue,” AT&T, and other large American firms and institutions, both public and private, evolved to work in the 1950s. The plan then was simple: high-school educated men (not women) could get a decent job, be it at General Electric, Hughes Aircraft, or as a schoolteacher, work until they were 60, and retire, often to a pension that came close to seventy or eighty percent of their full pay, not to mention health benefits.

Since there were relatively few retirees at first, and the cost of medicine was relatively low, the system worked fine. Moreover, firms like GE or IBM had few serious competitors domestically or internationally. It didn’t really matter whether they were ahead of the pack in terms of innovating on technology, having fewer workers do more thanks to technical training, or cutting back on the size of their workforce. There simply was no pack to keep ahead of until the 1980s, and even then, rising stock market returns meant that firms’ and institutions’ savvy pension managers could keep earning a healthy return to finance their growing army of retirees.

The blue social model was objectively obsolete, arguably, already by the 1980s or 1990s, but the ongoing financial crisis that began in 2007-2008 gutted it and showed how extinct it was. Read Mead’s (frequent) blog posts, or read the media carefully, and you’ll find numerous examples of this. The New Yorker published an article in recent years about how General Motors’ pension costs threatened to become greater than any of their day-to-day operational expenses. An auto company with a pension scheme was rapidly becoming an expensive, unsustainable insurance scheme that happened to manufacture automobiles. In Costa Mesa, California – Republican country – as in numerous other American communities – municipal finances were so ill-managed that the city has come close to going bankrupt and laying off essential personnel. Skyrocketing personnel costs (pensions and healthcare), systemic failure in education that meant that innovation didn’t happen in Orange County, and decreasing property values which meant fewer property taxes were all to blame.

Or consider the United States Post Office. USPS, Mead underscores, is a tragically perfect example of what happens to Blue institutions when they refuse to adapt. E-mail has been invented? That’s none of our business. The emergence of the Internet is revolutionizing advertising markets and making mail delivery of advertisements less relevant? Sorry, we don’t really do the whole technology thing here. The USPS, like many other federal government employers, has historically played a vital role in sustaining middle-class jobs for African-Americans and other minorities who were frequently discriminated against in the private employment marketplace.

But with huge pension costs that cannot be fully paid mounting, a huge health care expense burden, and the fact that fewer and fewer people send snail mail – reports indicated that even e-mail is declining as text messages and messaging over social networks becomes more popular – mean that the USPS is growing to resemble nothing else than a welfare scheme that happens to operate a severely dysfunctional communications system, at a loss, in order to keep appearances going.

End of an era?

It’s true that Mead sometimes goes a little bit overboard in his search for how to reform Blue institutions, as this profile of dysfunctional schools in Idaho suggests. (Using technology in classrooms is important, but he seems to swoon too hard for the pitch of the educational technology companies with miserable results, and ignore the crucial importance of good teachers, who do more to improve students’ lives than any computer program. Then there’s also the fact that the Silicon Valley elite don’t actually use the programs they sell to educate their own children.)

Still, the basic narrative is extremely compelling. It provides a bigger intellectual framework to wrap around Fukuyama’s observations about modernizing public administration.

And it can be applied to any number of major institutions in American life. Indeed, I suspect part of why Mead gets such pleasure, detectable in his mostly-delightful prose, from blogging, is that it represents the future as compared to the “legacy media” he spurns. And he might have a point: why should I bother with paying monthly cable fees to watch Anderson Cooper, Dana Bash, or Wolf Blitzer get paid ludicrous sums of money to cover trivial events when I could instead turn to the blogs or Twitter feeds of professors, policymakers, and professionals who actually know what they’re talking about?

As news coverage becomes increasingly irrelevant and non-analytic, these huge institutions – which employ and provide benefits for thousands of non-essential personnel – begin to fall apart under their sheer weight and the scope of their financial commitments. Faced with modern pressures, Blue institutions begin to look like giant retirement communities that happen to run an unprofitable, uninteresting side business – until they collapse.

So we’ve established that blogs are wonderful – great. But what could young Americans interested in reform – and maybe even a dash of careerism – do about all of this? One point that both Mead and Fukuyama seem to underscore to me is that following the usual professional imperatives – of playing by the rules in medicine, law, academia, etc. – is simply not going to cut it. Fukuyama’s piece on public administration seems to suggest that it might be a better use of time to, rather than taking those courses on energy policy, healthcare policy, or law and literature, to find courses, institutions, and educational programs that will give you some exposure to the nitty-gritty of managing public institutions: how public pensions are structured, managing healthcare costs for large institutions, and how to conduct effective negotiations with public sector unions. There are certainly work opportunities that can afford one these opportunities – working for your municipal government as a flunky or gaining some experience in finance working with pension fund managers and large institutional investors – but I’m unaware of such opportunities in more conventional institutions, like the RAND Graduate School, Harvard’s Kennedy School, or top American law schools.

Another corollary observation or piece of advice might be that you should avoid looking like a Blue institution yourself, or affiliate yourself professionally too closely with a Blue institution. Specifically, this would mean avoiding making investments that lead to you devoting significantly more of your income servicing debt, and past commitments (student loan debt, credit card debt), than than to investments that while inexpensive up-front lead to long-term payoff. Sometimes investments with huge up-front costs, like medical school, can be worth it in the long run; and while they perhaps won’t be making as much money as doctors in the long run, I know several people who threw themselves into foreign languages, policy, and government, and have tremendously interesting budding careers out of it – all at low to no cost.

Yet unfortunately, as I’ve highlighted in previous posts that mentioned the ‘Scamblog’ movement with American law schools, too few Americans are doing this. Recently, a bevy of articles – which has appeared too late to save many souls but is nonetheless helping – has highlighted how worthless an investment law school can be for many young Americans – and yet tens of thousands of bright young people a year still flood into an overglutted profession. They won’t be able to pay off their debt, at least not for a long time, and I suspect that many of them are setting themselves up for ‘Blue’ lives.

Maybe another way to look at it is revising the kinds of political role models that young Americans, whether Democrats or Republicans, are trained to be impressed by. I’d throw out two youngish politicians, both former Rhodes Scholars and graduates of Yale Law School, out for juxtaposition: Cory Booker, the Mayor of Newark, NJ, and Gina Raimondo, the Treasurer of the great state of Rhode Island.

Booker you may have heard of before: he’s the still-young mayor of Newark, NJ. After being closely beaten in a battle for mayor against the ultra-corrupt Sharpe James (Newark’s then incumbent executive), a campaign that was captured in the documentary Street Fight, Booker came back to win the mayoral election over Ronald Rice in 2006. Young, dynamic, well-educated, African-American, and – particularly in the national atmosphere around 2008 – potentially “post-racial,” he seemed, and still does seem, like an up-and-coming politician, with potentially national reach. And it’s true that there have been impressive achievements with Booker as mayor of Newark. Crime has dropped significantly, and Booker’s leadership has lent a sense of hope and dynamism to a city that could be so much more. That’s probably part of why Mark Zuckerberg donated $100 million to its educational system.

Cory Booker - one model for municipal leadership

At the same time, however, look at Newark from the Fukuyama-Mead-Blue Social Model-Public Administration point of view, and things look pretty dire. The city has almost gone bankrupt multiple times in Booker’s tenure. The Booker Administration remains forced to find a tricky balance of tax cuts and tax hikes to attract business without the city going more into the red. And its healthcare and pension costs are only rising. What if the hype around Booker reflects real tussling on the crucial matter of municipal fiscality, and more a media patina centered around important, but perhaps not as fundamental issues of crime and poverty?

For an alternative model of leadership, consider Gina Raimondo, the State Treasurer for Rhode Island. It’s true that Rhode Island cities have, albeit to a lesser extent than Newark, the same tangled pathology that many Northeast post-industrial locales suffer from: high unemployment, crime, failing education – all of the policy issues that Booker took up in Newark, mostly successfully. And I remain unaware of local politicians in, say, Providence, who have persecuted these issues as energetically as Booker has. Still, Raimondo, who has helped begun to right the state from being what Mead called “the Athens of America” in terms of crippling pension and healthcare obligations, probably deserves more credit and attention than she’s gotten thus far.

Gina Raimondo

Unlike the destructive debates in Wisconsin spearheaded by Republican Governor Scott Walker, Raimondo has managed to keep a technocratic, pension manager’s cool about her while negotiating with both state officials and union representatives, in order to keep the state’s school buses on the roads, its libraries open, and its schools open. Problems still remain to make the state an attractive place to do business, but one gets the sense that Rhode Island is moving away from the Blue model – a pension fund and healthcare scheme that happens to operate schools and host some businesses – towards a future-directed model of public fiscality that’s pro-growth and pro-education.

What’s more, even though Raimondo is a Democrat, because – as Fukuyama underscores – her acheivements are largely in the how rather than the what, she’s managed to become and stay popular, even though I don’t know, for example, what her views on gay marriage or abortion are. One wonders if a hybrid approach between a Raimondo – technocratic cool applied to really, really important issues – and the passion of a Booker, that still manages to skirt destructive, divisive issues, could be the way forward for the market-reforming, economic libertarianism-skeptical intellectual consensus of the Left that Fukuyama dreams about.

This might be a way to make public administration sexy again. It’s true that universities continue to attract students – and their tuition dollars that they increasingly need to survive – with degree programs with sexy names like “Global Governance,” “Technology and ___,” or International Relations – to say nothing of some of the postmodern fluff that is unable to contribute to the discussion Fukuyama and Mead would like to begin to stage. But I think that Mead’s on to something when he writes of American institutions beginning to collapse either under the own weight (public institutions with large pension and healthcare commitments), or under their own irrelevance (legacy media, postmodern academics, hip degree programs). As recent events in Iowa and, soon, New Hampshire, demonstrate, we still live in a hype and appearance-driven media environment, but if the success of Raimondo is any showing, I think Fukuyama’s right, too: public administration and fiscality is going to become too big of an issue in the next twenty for politicians and Big Media to ignore.

That, or we will have resigned ourselves to live in a world of insecure retirements, frequent medical bankruptcies, all at the cost of excellent reality television. Either way, we’re in a for a ride. It’ll be interesting to see how it develops.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s