Identity Politics

Identity politics is one of the worst things to hit the United States since slavery and the Civil War. Two World Wars and a Depression were not exactly a walk in the park, but they united the nation.   How did Identity Politics come about, what fostered its growth, and why is it so devastating to the concept of the United States?


Any change in policy is going to be better for some groups of people than for others.  That is unavoidable.  And it is also true that some identifiable groups have not been given a fair shake in America over the years—just look at the African-American experience, from forced immigration to slavery to Jim Crow to de facto segregation and discrimination.  That needed to be corrected, and we have made some significant progress—discrimination under the law has been eliminated, we have made policy discrimination reprehensible if not illegal, and we have drastically reduced individual prejudice— total elimination of the latter may not be possible, given human nature.   And beyond race, society has not often been kind to people who are perceived as “different”, in many ways.


But something more is going on.  Politicians have found that in elections that are close, swaying an identifiable group to split heavily in one direction or the other is a way of tipping the balance toward winning.  And so by targeting a group that has a unifying characteristic, and offering specific benefits to that group if elected, the candidate hopes to achieve victory, which is what politics is all about.  Politicians have identified groups by race, by religion, by gender, by ethnicity or nationality, by native language, by sexual orientation, by economic status, by urban/suburban/rural living, by any way that groups can be carved up.


Three trends have fostered the growth.  One has been the absorption of people with the self.  Psychology has been a great enabler, bolstering people’s sense of their own self-esteem and right behavior, which has led to a proclivity to blame others for an individual’s lack of desired success.  In turn, lacking that success often leads to a hunt for blame, and to a feeling of victimization.  Victimization is easier to take when it is cast as a result of prejudice against that individual’s perceived identity group, rather than as a result of the individual’s actions.  A second trend has been the combination of activism with social media.  The success of protests and civil disobedience evidenced in the Civil Rights movement has been adopted by many aggrieved groups, and social media has allowed many people who would otherwise be isolated, to dwell in the echo chamber of like-minded people, and with the strength of numbers, demand action to redress their grievance.  Third, over time, as the government has offered more and more benefits to citizens, the nation has moved from the individualism and independence of its founding generations, towards a more collectivist state, where state benefits and their concomitant regulations and control are an accepted part of life.  Benefits can be targeted to specific identity groups to corral votes.  President John F. Kennedy, in his 1961 inaugural address, was prescient when he said, “Ask not what your country can do for you—ask what you can do for your country”.  Identity politics could not possibly be more in opposition to that sentiment.


The motto of the United States, found among other places on every dollar bill, is “E Pluribus Unum”, or, Out of Many, One.  Identity Politics is the exact opposite, Out of One, Many.  It is destroying the fabric of our society.  It pits Black against White, Women against Men, Asians against Blacks and Hispanics, Religious against Secular, heterosexuals against all other sexual orientations, rural against urban, etc.  Extreme conservatives ridicule Progressives; Progressives won’t even talk to conservatives.  In the past, divisions existed, and in fact the era leading up to the Civil War and the war itself were probably worse.  Divisions seem to be healed best by a national emergency, like a World War.  We must find a way to reunite without war, in this age of nuclear weapons.  If we do not reunite, there is no alternative to national decline.  It happened to Greece, Persia, Rome, the United Kingdom, and the Soviet Union.  It could happen here.

Although the current administration is not providing any leadership to address this problem (and in fact aggravates it), nor is the Congress, the problem started well before 2016, and is running deeper than the 2016 election and its aftermath.  The next blog will pose some possible alternatives to ameliorate this critical problem.



About ten days ago, I had a real treat.  I met and had lunch and discussion with Tom Campbell, in Orange, California where he is teaching.  Tom Campbell, for those of you who don’t remember or never knew, was a five-term Congressman from Northern California.  His bid for the Senate ended in defeat, and he is now a Professor at Chapman University.  He teaches both law (he’s an attorney) and economics (he has a PhD in the field from University of Chicago).  Tom served as a moderate Republican, a near-extinct species.

He and I see alike on the two dominant parties being pulled to the extremes by their ideologues—Democrats by the progressives, Republicans by the tea party.  We both think that President Trump represents neither, and is an anomaly, and an unfortunate one at that.  We both feel that our country needs a third party, a centrist one, dedicated to re-uniting the country by representing the large and unrepresented middle—conservative Democrats, Independents, and liberal Republicans.  He believes that legislation is almost always a series of compromises, rather than holding out for the extreme, having insufficient results, and getting gridlock as a reward for obstinacy.  We agreed on a remarkable number of policy issues.

Where we differ is more in strategy.  I believe the way forward is to attract enough attention and followers on a national scale, to have a successful approach to significant donors that will build a financial war chest, and then to seek appealing candidates for “purple” state offices, the House, later the Senate, and eventually, the Presidency.  Tom’s approach is to start in California, which clearly needs fixing as well as the Federal government.  He would form a Centrist party in California, raise money, and recruit candidates for the State Legislature. He believes it’s important to deny any party a 2/3 super-majority, and just one or two legislative victories can do that.  With those new legislators in the center holding the balance of power on fiscal matters (that require a 2/3 vote), and showing the way to useful compromise, the party might grow to support a candidate for Governor or US Senate in the future.  From growing a party in California, he would approach other states where the chances of success were reasonably high (the “purple” ones), and roll out a party that way.

I have to tell you that whichever strategy is better, Tom has an infinitely better sense of the tactics to get there than I do.  Counting primaries and general elections, Tom has run thirteen times in California, and won ten times– he has been there and done that.  He knows the important elements of election law, and the easiest ways to qualify a new party for a position on the ballot.  He has had contact with important sources of funding.  And he has the personal charisma to win votes.

Midterm elections are over.  Keep an eye on Tom and on this effort.  I think this man has his thoughts together, and could be the leader of an important national movement, starting at the state level.  I will be tracking him, and letting you know of whatever opportunity he offers to centrist-thinkers.

What Could a Third Party Accomplish?


What most people think of, when a third party is mentioned, is the Presidency.  We have been conditioned to thinking that way, because we have seen third party Presidential candidates emerge, late in the election cycle, who are well known and charismatic.  They go down in flames in the general election.  They are not heard from again.  Think Ralph Nader, Ross Perot, even George Wallace.

But I’m going to ask you to imagine a 6% Solution.  “What on Earth is that”?, you are probably wondering.  Think about 6% of Congress, 26 Representatives out 435, and 6 Senators out of 100.  That is likely to deny either of today’s dominating parties a majority in both houses, and almost definitely in one house.

Now, here is a scenario.  The Senate has 48 Republicans, 46 Democrats and 6 American Centrists.  The Republican House, in an effort to save Social Security and begin a reduction of entitlements, has passed a bill that raises the age for full benefits to 70, makes non-citizens ineligible, and cuts the COLA ( cost of living adjustment) to 1/2 of the inflation rate.  The Democrats go crazy in their denunciation of the bill, and not one will vote with the Republicans.  The bill will die unless the Republicans can get American Centrists to vote with them.  What power to force reasonable compromises into an amended bill that goes back to the House!  The only way the Republicans can pass anything on Social Security is to listen to the 6% !

Here’s an alternative scenario.  The House with 209 Democrats, 200 Republicans, and 26 American Centrists, proposes a bill to provide free college tuition to all Americans.  The Republicans, citing potential fiscal disaster, are 100% united against passage.  What choice do the Democrats have to get any bill passed?  Only to accept compromises acceptable to the 26 American Centrists!

Aren’t there other ways to accomplish the same results?  Can’t moderate Democrats and moderate Republicans get together in a coalition, like the current “No Labels” group?  Of course they can, but there is a long term, structural problem.

The problem arises from three factors:  the natural desire to get re-elected, the power of the national party organizations to raise and dispense money, and gerrymandered districts.

When a moderate Democrat, who votes sometimes with moderate Republicans, is up for re-election, he or she wants to receive funding from his national party.  The Party, which is leaning progressive, can withhold funds.  The mere threat of that at times of Congressional votes can easily sway a senator or congressman to vote the party line.  Of course the same is true for Republican Members.

And gerrymandered districts exacerbate the problem.  In a district that always votes Republican, the true election is the primary, more than the general election.  The Party, which is leaning ultra-conservative, can choose to fund a Tea Party acolyte against the moderate incumbent, giving the leadership of the party the ability to frighten incumbents to vote the party line, rather than with moderates who sometimes vote with the other party.  And of course the same is true of Democrats.

Only a third party, with its own, independent fund-raising capability can counter the power of the two major parties, overly influenced by their extreme and ideological wings.  The Presidency can wait for another election cycle.

Rising Above the Fray


I just saw the movie, “RBG”, about Justice Ruth Bader Ginsburg.  It was terrific, and I recommend it highly.  And although I might differ from her positions on some issues, her most important ones concern gender and minority equality before the law, and she has overwhelming moral and legal strength on her side.  The movie brought me back to a subject I have been mulling, the culture wars.

Why have the arguments and differences between liberals and conservatives (or better, between progressives and tea partiers), become so bitter?  I find that on a very large swath of economic policies—monetary, fiscal, free markets–for the most part, people on both sides can talk to one another.  But on social issues—abortion rights, homosexual and transgender issues, redistribution of wealth and income, gun control—friendships have been terminated and people won’t talk to someone with opposing views.  Compromise and forward movement is impossible when this occurs.

Where else in history, or in modern times, have we seen this kind of total rejection of “the other”?  We have seen it between fascism and liberal democracies, between communism and free market democracies.  We have also seen it between Catholics and Protestants, between Christians and Jews, and between Islam and all other religions.

In each case, the opposing sides held different (and unprovable) beliefs about the nature of man, about their group’s unique right to dominance, about the existence of God and the Eternal’s relationship to mankind.  Perhaps because these beliefs are unprovable, to challenge them is to challenge who a person really is.  And that becomes so uncomfortable, that people just do not want to hear, debate, or reason with someone who represents that challenge to self.

It is possible, as our society has become more secular, less religious (or at least less involved with organized religion), that other ideals and beliefs have replaced those core values held by followers of organized religion, who have their own beliefs shaped by religious dogma or tradition.  Regardless, it is opposing social beliefs, more than economic, that are at the root of the culture wars which have made our partisan politics so bitter and uncompromising.  That last thought is not original; somewhere in my reading I came across it.

Is this an intractable problem?  One way out of it is through better leadership from those at the pinnacle of our society, the President, Vice President, Speaker of the House, respected business leaders, lawyers or academics.  Leadership can stress those unifying elements that bring us together as a nation, and remind us of them frequently, so the differences, which will always exist, don’t overwhelm us.  Another way was on display in the movie I just saw, which inspired this blog post.

On the Supreme Court, Ruth Bader Ginsburg became best of friends with the late Justice Antonin Scalia.  Two brilliant lawyers and judges could not have been farther apart politically, yet they were known and acknowledged as close friends.  What was the magic, the chemistry, that allowed this to happen?  Clearly, they were both lawyers of the highest caliber, and developed mutual respect.  They were in an environment where they were forced to work together, and to listen to each other, whether they agreed or not, and sworn to uphold the Constitution, although they certainly interpreted it differently.

We cannot force adults to listen to people with whom they disagree, or to work side by side with them.  But there is an arena where we could do a better job with a large minority of the population, in college or university.   From the reports and articles I read, we don’t seem to be doing a good job in this arena.  University administrations need to make sure they are not creating classrooms of indoctrination, where dissent from the professor’s view is suppressed or disrespected.  Speakers coming to campus should be protected, allowed to speak, and encouraged to put forth controversial views.

In another era, the military service and the draft performed some of this function.  It’s possible we should consider some sort of compulsory national service.  But that’s a topic for another blog posting.

Catching up; and The Innovation Machine

It has been two months since the last post, partly because I’ve been overly busy, and honestly, partly because I got a bit discouraged, after a year of postings and only 58 subscribers.  But that doesn’t move the ball forward, so I’m back at it again, hoping no one has given up on me, in despair or boredom.


In this past weekend’s Saturday edition of the Wall Street Journal, there were two very interesting and germane op-ed pieces.  One was the weekend interview of Glenn Hubbard, by Tunku Varadarajan.  Hubbard, currently Dean of Columbia University’s Business School, had served as President Bush’s Chairman of the Council of Economic Advisers.   I will quote a few key (and supportive) snippets from the piece:  “you’ll see that the goal for economics isn’t GDP, it’s to deliver a kind of mass prosperity, with people feeling like they’re all part of the system”;  “I think it’s more about opportunity than inequality”; and “America’s policy makers need to be in the middle—the debates we’ve seen in Britain and here in the U.S. are centered on people who feel like opportunity has left them, and they may be right—I think that is a government problem”.


The other editorial was by Senator Orrin Hatch, who issued a cry-from-the-heart against Identity Politics, the labelling and stereotyping of individuals, according to their race, religion, party affiliation, ethnicity or other grouping.  This “tribalism” as he calls it, creates separating walls and barriers, obstructs or even eliminates debate of ideas, and has the possibility, even probability, of destroying E Pluribus Unum, “out of many, one”.  “Identity Politics conditions us to define ourselves and each other by the groups to which we belong.  Soon, we lose sight of the myriad values that unite us. We come to see each other only through the distorted prism of our differences”.


Along with these fine points by experienced leaders, I have seen signs of movements everywhere to stand up for centrist approaches, whether they are independent third party attempts, or the Congressional “No Labels” caucus.  All we need is a recognized leader who can look well beyond the next election, to build a movement or party that can win back the governance by consensus and compromise, rather than striving to destroy the opposition without ever listening to them.


Enough of that.  Now I am going to tell you a (true) story of innovation and incentives on display.  In March, with one of my startup clients, I saw, in real, visible, audible and tangible mode, the incredible American machine at work.  And it was amazing and energizing!


In my consulting practice, I am helping a couple startups launch exciting businesses.  One with great potential based on the entrepreneur’s scientific innovation, needs to raise capital to get underway.  We attended a West Coast Venture Summit in Silicon Valley.  Several hundred people attended, and I am guessing it was about 70 % entrepreneurs, 15% service providers, and 15% venture capitalists or angel investors.


It started on Tuesday evening with a wine/beer reception in a crowded space, that was essentially speed-dating for dollars.  It continued the next day with panels discussing relevant topics and with entrepreneurs making their pitch for financing.  Startups got about 3 minutes each, and more mature companies about 7 minutes.  The range of projects and companies was very broad, from MD’s who had invented products and processes for weight loss, through complex energy usage sensing, analysis and corrective action, to a commercial website that enabled parents to connect with coaches for their children in music lessons, sports, tutoring, arts, etc.


It was a match-up of entrepreneurs who were risking their career and fortune to meet new needs of society, with investors who were willing to take huge risk with their money (or that of the people who invested in them), to help bring these new products and services to fruition in the marketplace.  What enticed them all was the opportunity to make money, which a capitalist and market economy permits.  Certainly there were other motivations—to build an organization, to brag about insight, to be the proud parent of a success among others.  But what united them, and created the match between source and use of funds, was financial opportunity.


The system works.


Guns and Gun control

In the wake of the Parkland, Florida school shooting massacre, millions of words have been written, spoken, and screamed.  The left wants the Second Amendment abolished and all guns collected and destroyed, and the NRA (mostly on the right) hold it sacred and try to prevent any change in the status quo.  What the nation gets is stasis, otherwise known as “no progress”.

Once again, a compromise position, a centrist one, is possible.  It will not solve all problems, but at least it is a positive step (or some positive steps) in a direction that could be grudgingly accepted by all.  The right’s position does not take into account that a majority of Americans find the current situation intolerable, and no action today could lead to more draconian measures in the near future.  What the left does not realize, is that with hundreds of millions of guns already in the hands of the public, mostly unregistered, there is only so much that can be done, and over-reaching can seem unreasonable to those who would support sensible measures.

Here is a package of actions we could take, which, when bundled, might be acceptable.  I don’t claim any of the ideas are original, but packaging them together might make sense.

  1. Install metal detectors at school entrances, and hire an armed security guard for each school. Kids are at least as valuable as airline travelers.  Funds to flow through Homeland Security.
  2. Require registration and background checks on any firearm purchase, including gun shows, internet, etc., as well as retail. Criminal background, non-citizenship, or mental illness disqualifies a buyer.
  3. Prohibit the sale of automatic weapons, and any kit that can convert a single shot or semi-automatic weapon to automatic capabilities. A citizen cannot own a tank or 155 mm. artillery piece; nor do they need an automatic pistol or rifle.
  4. Re-affirm the Second Amendment.
  5. Raise the minimum age to purchase firearms to 21, with the exception of honorably discharged military personnel, and peace officers.
  6. Make an open and generous offer by the government to repurchase automatic weapons that have been purchased in the past. Destroy them or give them to the military services.
  7. Allow as evidence for issuance of a search warrant, dangerous comments on the Internet and Social Media, as well as neighbor reports to police of possible armed instability.


These measures, if passed, cannot prevent another school shooting.  Nothing can. They can, however, lower the probability significantly and increasingly over time.  I’m sure there are other balanced proposals, but this is one that I think should be debated.

Shutdown Proves Need for American Centrist

As you are well aware, an impasse in the Senate led to a short shutdown in the Federal Government, for about  3-4 days.  No big deal.  This time.  News Media went over the top, but we ordinary citizens knew the shutdown of 5 years ago lasted longer and had little impact.  But what would a shutdown for a month look like?  Or two?  Or more?  Or a shutdown over increasing the Federal debt limit?


This all seems so childish. Why is this happening?  On page 1 of today’s (Monday, January 22, 2018) Wall Street Journal, there’s an article entitled “Party Bases Flex Their Muscles”.  Here is a portion, quoted directly:  “In this case, as in many others, the process is being driven not by those in the broad center but by those in the more narrow and partisan ideological bases of the two parties.  The shutdown has happened because most politicians worry more about a backlash from those bases for not being rigid enough than about an adverse reaction from the broader public for being too rigid”.  And: “Activists in the bases, after all, provide the energy in election season, and they have been increasingly willing to shoot their own kin when they prove too willing to compromise with the other side”


I have not written, and cannot write a better, more powerful and persuasive reason for the creation of a third party, a Centrist party, who would have its own activists forcing compromise and actions favoring the broad neglected center of our nation.  People with political experience will say that the two major parties have made it impossible for a third party to arise, but they are shortsighted and wrong.  Their examples are for third party Presidential candidates, coming forth in an election year.  An effort that starts now, and has the Presidential election of 2024 in mind, can build grass roots support, House and Senate members, and challenge the existing parties, ending the dominance by the extremes.


But what, you say, can we poor individuals of the center do about it?  We can write and comment on this blog.  We can spread the word of this blog to everyone we know, urging subscription.  We can hope and work to achieve wider recognition, acceptance, and call to action.  With a larger mass, we can attract the politicians who are able and in the center, to quit their party and give legitimacy and leadership to this party.  We can start a movement to save our nation from crippling internal strife and move forward, but the movement starts with you.

A Centrist Opportunity for the Common Good


Everyone agrees that we need to maintain and upgrade our infrastructure—crumbling roads, bridges, tunnels, city streets, airports, etc.  Progressives are all for spending the enormous amount of money, and either letting taxpayers or future generations (of taxpayers) pay for it.  While Conservatives would like to improve the infrastructure too, they are loathe to pay for it now, or to saddle our grandchildren with it.


The Republican Congress and Administration has just signed into law a new tax bill.  Among other things, it provides a way for U.S. –based multinational corporations to bring back literally trillions of dollars of overseas profits.  They have been left overseas until now as a way of legally avoiding a second layer of taxation by the U.S. governments, without an excessive tax burden.  Although many Democrats agreed with at least these concepts in the bill, they did not vote for the overall tax bill.


Why not combine this recent event with the obvious need?


Suppose the government were to pass a bill which allowed a corporation who repatriated profits from abroad to use up to 30% of the funds to purchase a special new issue of government bonds which would pay them tax-free interest, and also provide an equal amount of tax credits for five years.  Many corporations would snap up such an offering, which could provide some or all the financing necessary to rebuild our infrastructure.  It would keep the government out of the capital markets, not causing distortions in them for massive new borrowing.


Next, someone will eventually have to repay the borrowings—that’s the way borrowing works.  It either has to be repaid by taxpayers, or by the infrastructure users, without intervention of the tooth fairy.  If the newly built facility were to come with toll collections for its use, the bonds could be issued as revenue bonds, where the tolls collected would go first to paying interest and principal on the debt.  Use of new, automated toll collection, like EZ Pass, would prevent bottlenecks and the need for toll stations.  Commercial truckers could pay a new tax based on facility usage—and yes, they would raise their prices, but again, the users would be paying, not general taxpayers.


How do we know that the states would use the money wisely, and not just rush to get money for construction projects?  Some discipline could be maintained by making the states that got the money be the guarantors of the bonds, should the revenues generated from tolls prove insufficient for debt service.  That would also get the borrowing off the Federal government books, thus not increasing the deficit, and transferring it to the states who would have incentive to only request funds for broadly used facilities.


Of course we would see squabbling and infighting over who got the funds for what project.  That’s what Congress does.  But with the various using states absorbing the guarantee for repayment, some sense would be injected into the process and requests.  This appears to be a project and solution that most in America would back, and is a Centrist solution to a problem, taking advantage of current opportunities to marry them to current problems.

More Economics –Risks and Rewards


Improvement in societal standard of living comes from advances in economies.  Most advances in economies derive from technological innovation creating new products and services or enhancing productivity, at least in today’s environment.  And technological innovation is either incremental, building on prior technology or fundamental, building on scientific discovery.


Scientific discovery often comes from research universities, funded both by the government  (in wartime for defense, in peacetime mostly for health) and by private industry.  Most incremental innovation is funded by industry and by private investors.  Regardless of the source of funding, designing, developing, and producing the product that consumers or business want to purchase requires one or more entrepreneurs.


Who are these entrepreneurs, either independent or corporate employees (sometimes called “intrapreneurs”)?  They are people who obviously believe in the idea or concept, but also are motivated by the lure of potential rewards despite the inherent risks


What are the risks?  They may involve loss of money, loss of other opportunities to make money, loss of reputation, fear of failure, waste of a substantial portion of one’s productive years.  For a corporate employee, it may risk his career and potential pension, perhaps his current employer.


As an interesting aside, entrepreneurship in Europe has lagged that in the U.S. significantly.  One of the cultural reasons, I believe, is that Europeans are far harsher and more judgmental of failures.  Someone who starts a company in Germany (or elsewhere) that fails, will be referred to, often for the rest of his life, as “Frederick, the one who started the software company that went bankrupt”.


What are the kinds of rewards being sought?  They include:  making a lot of money, being one’s own boss, favorable reputation, earned respect, satisfaction of accomplishment, economic and organizational independence.  For most entrepreneurs, the chance to make a lot of money looms large, although it is certainly not the only motivating factor.


One of the enabling factors that has fueled the growth of innovation has been the availability of risk capital, or venture capital.  Although reputation and bragging rights motivate the venture capitalist, his overwhelming motivating potential reward is monetary.


Consideration of the history of venture capital in the U.S. is very interesting.  Prior to World War II, wealthy families backed occasional ventures, but there was no formal and professional organization.  After the war, four VC firms came into existence:  J H Whitney & Co, Rockefeller Brothers (later changed to VenRock), American Research and Development, and Bessemer Securities.  By the mid 1970’s, there were a handful more.  Then, in 1978, President Jimmy Carter tried to eliminate any difference in taxation rates between ordinary income and capital gains.  Congress rebelled, and passed the Steiger Amendment, which enshrined a 50% reduction in tax rate for gains on investment held longer than 12 months. The outpouring of money into new and existing venture capital investment firms since that date has been nothing short of incredible.  And, with all that money available now, entrepreneurs started emerging from the woodwork, and we have had the boom in new companies and new products that has changed the way we live.  Motivation matters.


So what, if anything, can the government do to encourage entrepreneurship?  I believe there are four areas:  protection of intellectual property, funding of basic research, licensing requirements, and taxation policy.


Our patent laws are good.  Our young and still small companies are vulnerable to foreign nations and companies stealing their intellectual property.  The government could take a stronger position with foreign governments, most notably China, to put end to the practice, perhaps even by joining the U.S. startup company as a joint plaintiff.


It is difficult for our corporations to fund basic research, when they are under pressure from investors to produce quarterly earnings gains.  The downstream benefits of basic research are long in coming, and risky to begin with.  We should have a national policy of funding the great research universities and qualified researchers, through the ups and downs of the economy, but of carefully and fairly vetting the various proposals.  We should encourage universities to develop well-thought out technology transfer templates and agreements.


Licensing for many small businesses, especially service-based ones, is done mainly by the states, rather than by the federal government.  There are many cases of restrictive licensing, lobbied for by existing competitors that make entrepreneurship in smaller sized businesses far more difficult than it should be.  State governments should set up commissions to review all licensing regulations, with an eye toward fostering new business formation and competition with entrenched firms.


We should encourage the long-term investment nature of venture capital with tax policy.  Without changing tax policy for investment in public companies, we could tax investment gains in private companies (private at the date of investment) on a sliding scale, favoring length of ownership.  For example, an investment in a startup held at least two years could receive a tax break of 20% off the public shares capital gains rate, one held three years 40% off, etc., down to 90% off from 5 years and on.  This would definitely incentivize both entrepreneurs and investors in startups to take a long range view.


I think we get reasonably good marks in the arena of encouraging innovation.  The suggestions above will help strengthen our position, but the most important thing we can do is to avoid doing damage to what we have today.  Any prospective law or regulation should be strangled in its cradle, if it makes it more difficult to start a business, if it fails to protect intellectual property, if it reduces funding for scientific discovery or if it makes financial gain  less appealing for high risk investments in startups.

Making America Great Again

We all know where that slogan came from!  Let’s look at the real picture.  We’ll examine the history, the current facts and trends, a forecast for the future, and maybe even a prescription.  We’ll also come to grips with whether or not we should consider America an “exceptional” nation.


When the United States was founded, we were a collection of small colonies of the British Crown.  We struggled to gain our independence from an overseas, absolute monarch not of our choosing (nor of anyone else, for that matter).  Although small and weaker than our former rulers, we won because of distance, logistics, local knowledge, grit and determination, and a powerful ally in France.  When we wrote, ratified, and enacted the Constitution, we became great—not in terms of wealth, power or cultural sophistication, but in the philosophy of government.  We were a republic among monarchies, a democracy where the general population (at least of white males) got to choose its leaders, lawmakers and law enforcers.


Throughout our history, we remained exceptional, though not unique, by means of transfer of power under the rule of law, without accompanying violence.  We did this even through several assassinations, deaths of a president through natural causes, impeachments, and a resignation.  We were far from exemplary in other ways—the manner of treating indigenous peoples, the persistence of slavery for a number of years, Jim Crow laws, some imperialism at the end of the 19th century, etc.  Some of these appear worse today when we ignore an understanding of the context at the time; nonetheless, they were blemishes on the record.


During the 1800s and early 1900s, we were among the leaders of the world in adoption of industrialization and the deliberate discovery and use of technology.  We slowly found our voice in the artistic and cultural realms, but only became a leader with the advent of recorded sound and cinema.


But it was in the period from our entry into World War II until very recently that we became “great” in the sense of a colossus astride the world.  How did it happen?  We and our allies won the war against the greatest power on the European continent and the greatest power in Asia.  By the end of the war, our enemies were completely devastated.  But our allies, closer to the battle front, were injured too, and exhausted by a war that lasted at least 2 years longer for them and followed (for some) an equally terrible war one generation prior.  Meanwhile the United States, separated from its enemies by two vast oceans, escaped unscathed, with an industrial base vastly expanded to produce war material.


We were the “greatest” nation on Earth from then.  And we behaved in an unprecedented and magnanimous way toward former enemies and devastated allies, with aid in the form of the Marshall Plan.  And unlike other victors in the past, we allowed conquered lands to return to self-government, albeit with some restrictions on their ability to re-militarize.  We were challenged by the Soviet Union, but its enmity helped build and preserve unity amongst our population, and we eventually defeated it as a threat, due to our willingness to hold steadfast until it fell of its own internal contradictions.  With an unmatched industrial base and no competition, our exports dominated world markets.


Where have world events gone?  We can no longer say we are the “greatest” among nations.  Why?  We have had several serious miss-steps by our leaders in foreign affairs and national security.  We have seen increased partisanship internally.  We have seen the growth of identity politics spawn feelings of victimization and divisiveness.  Events outside of our control also have had a major diminishing effect, such as loss of secure employment due both to automation and globalization.


The world’s most populous nation, China, has undergone radical growth.  They are 4 to 5 times our size in population, and have moved incredibly fast in terms of economic growth.  Given their size, a GDP per capita of only 1/3 of ours would still make them a larger economy.  They are building their military capability.  We cannot change these facts.  Unless they are split or fractured by a civil war, which is possible but unlikely (given their suppression of any opposition to the ruling party) we cannot change their importance on the world stage.


Russia, under its current thugocracy, is a challenge to us in world affairs, but not a significant long term challenger.  Their system is corrupt, they have major looming demographic problems, and they will slowly be less important to the world.  Other nations, such as Germany and Japan will challenge us in competition for goods and services in world markets, but do not and likely will not, have the ability to project military power.  India is populous enough (3-4 times US population) to challenge us, but their impoverished status, and their socialist/bureaucratic obstacles will not lift them to prominence on the world stage.  The Islamic jihadists will continue to prove a serious annoyance, and may damage us with 9/11 insecurity from time to time, but are not a nation-state, have no industrial base, and will never rise above their current status.


But the world has changed, and we have, too.  Even if we were more united, better governed, we cannot change the existence of other economic powers, or especially the economic/population/industrial challenge that is China.  The post-World War II years where we clearly the leader of the Free world, and in retrospect, the leader of the world, are gone and not recoverable.  The years 1945-1990 were unique and impossible to replicate.


That does not mean we are insignificant.  We are clearly the most important nation in the world, but no longer the undisputed “greatest”.  We can improve, and improve our status with better government, a less fractured population, greater civility and better policies.  We are not consigned to perpetual slow growth of 2% per year or less.  We don’t have to be low on the totem pole of K-12 academic achievement.  There are lots of dimensions in which we can recover leadership with better government.  That does not necessarily mean more laws, more regulations, more government programs, etc.  It does mean a Congress and President more concerned with the common good than with being re-elected, regardless of the consequences.


We can be great again—but not in the sense of the 1945-1990 period.  In fact, change “great” to “greater”; we are still great, even if not a giant among pygmies.


Are we exceptional?  Of course, one could argue that every nation is exceptional in some way—after all, each is unique and has had a unique history.  But I do believe our exceptionality is of transcending value—in the freedom we all enjoy as citizens, and the way we have used that freedom to improve ourselves and all mankind.