Economics: The Growth Imperative

Paul Ryan, the most intellectually ambitious Republican in Congress, lavishly cites Brooks's book. Over the past few years, Ryan has been promoting a roadmap to comprehensively reform the nation's tax and welfare system. On the tax side, he would sweep away most of the special-interest-favoring tax credits and subsidies and give people a chance to join a simple tax system with only two rates.

On the welfare-state side, he'd sweep away most subsidies to the middle and upper classes, like the tax exemption on employee health plans. He'd essentially voucherize federal benefits, like health care and Social Security, and increase federal subsidies for people down the income scale.

The idea would be to end the complex and sclerotic arrangements and solve the fiscal crisis. The effect would be to radically reduce the power of federal policy makers and shift discretion (and risks) onto individuals.

Both the Democratic and Republican approaches have problems. The Moon Shot Approach relies on omniscient experts to pick out the engines of future growth and on public-spirited legislators to pass bills that maximize productivity instead of special-interest favors. The weakness of the Brooks and Ryan approach is that their sociology is off a bit. America is not a nation of risk — embracing pioneers. It is a nation of heroic bourgeois families who want to thrive within a secure social order. The economic debate is not as Manichaean as the culture war since most people are split down the middle and because it's easier to compromise on money than on life.

Still, these two visions are better than the nativist and antiglobalist visions that will be arising. And despite the tough battle talk, they are combinable. At his best, Ryan wants to cleanse and rejuvenate the nation — to sweep away the special-interest sclerosis that strangles flexibility and growth. At his best, Obama wants to create a context for innovation — to employ blue-collar workers and to spur growth clusters like Silicon Valley, which, let us remember, was a magical cocktail of federal research subsidies, hippie culture, entrepreneurial daring and university settings.

The two projects are in tension, but in a sane political culture they are not mutually exclusive. It should be possible to simplify the tax code, target welfare spending and also build strong infrastructure at the same time.

For more, see The Growth Imperative by David Brooks, July 29, 2010, at The New York Times.