March 21, 2004

"Private affluence and public squalor"...a positive indicator

Thomas Friedman has an interesting op-ed, which I think has things exactly wrong:

"But it will require some radical changes in politics: While India has the hardware of democracy — free elections — it still lacks a lot of the software — decent, responsive, transparent local government. While China has none of the hardware of democracy, in the form of free elections, its institutions have been better at building infrastructure and services for China's people and foreign investors.

When I was in Bangalore recently, my hotel room was across the hall from that of a visiting executive of a major U.S. multinational, which operates in India and China, and we used to chat. One day, in a whisper, he said to me that if he compared what China and India had done by way of building infrastructure in the last decade, India lost badly. Bangalore may be India's Silicon Valley, but its airport (finally being replaced) is like a seedy bus station with airplanes.

Few people in India with energy and smarts would think of going into politics. People don't expect or demand much from their representatives and therefore they are not interested in paying them much in taxes, so most local governments are starved of both revenues and talent."...

The infrastructure ploy is a fall-back position for leftizoids who have been forced to concede that government can't actually build an economy. So their position is "The economy can't grow until after we raise taxes and build roads and airports..." Or "until after we build a new City Hall to house the better government that we need before the economy can grow."

India is doing it right, Doing what the US did. What was Galbraith's phrase, "Private affluence and public squalor?" That's a good sign. Buy India, sell China.

Your High School history book probably made a lot of hay with the Erie Canal. But mostly America grew by starving a fairly corrupt public sector and letting the private sector boom with low taxes and few regulations. The museums and universities and national parks and highway systems came after economic growth. Often paid-for or led by "robber barons" or their heirs. They were pulled into existence by rising expectations and prosperity. Rather than being pushed by government in the expectation that these amenities would somehow spark growth.

Likewise the demands for good government came after the great explosions of wealth. Your history book probably implied that "The Gilded Age" and its plutocrats caused corruption and bad government. To which reformers responded with things like the Progressive Movement. But the corruption was there all along. It was increased national wealth that stimulated us to indulge in luxuries like reform movements.

"Few people in India with energy and smarts would think of going into politics.." That was just how things once were in America. Or rather, how they would have looked to a NYT columnist of 100 or 150 years ago. Actually, men with "energy and smarts" were entering politics, but they were poor and hungry ruffians that a Thomas Friedman would have disdained. When the wealthy and elegant young Theodore Roosevelt decided to enter the mire of New York politics, his social equals thought he had gone mad.

(Even the Erie Canal was not one those "highways to nowhere" that get built in Infrastructure-Land. It was a fairly visionary public project, but the need, the demand, the wealth to build it, all existed prior. The canal was busy from the moment it opened. The histories tend to imply that the world stood still until the canal was built. That suddenly, with the opening of the canal, settlers started heading West. No way. "In nine years, Canal tolls more than recouped the entire cost of construction..." That's the tip-off. )

(via Orrin Judd)

Posted by John Weidner at March 21, 2004 10:05 AM
Weblog by John Weidner