Wednesday, January 26, 2011

SOTU and Sputnik: Economic nationalism, political paralysis, and the decline of the American Empire

I haven't yet commented on last night's State of the Union address, nor on the Republican response, but, then, what more is there to say?

TNR's John Judis thinks it was President Obama's best speech as president. I do not agree, though I'm hard-pressed to name a better one. Not because I thought his SOTU was all that great but because he hasn't exactly given many memorable speeches as president.

Content-wise, I suppose a lot depends on what you think of Obama's economic nationalism, the core theme of last night's speech. The world is moving ahead and America is in decline. That decline is relative, as it is still on top, for the most part, but how long will it be before China and perhaps India take over?

In referencing Sputnik at the core of his speech, Obama was saying that America is now at a fork in the road, much as it was after the Soviet Union launched that first satellite into space. One road leads to further decline, one road leads to further superpowerdom:

Half a century ago, when the Soviets beat us into space with the launch of a satellite called Sputnik¬ł we had no idea how we'd beat them to the moon. The science wasn't there yet. NASA didn't even exist. But after investing in better research and education, we didn't just surpass the Soviets; we unleashed a wave of innovation that created new industries and millions of new jobs.

This is our generation's Sputnik moment. Two years ago, I said that we needed to reach a level of research and development we haven't seen since the height of the Space Race. In a few weeks, I will be sending a budget to Congress that helps us meet that goal. We'll invest in biomedical research, information technology, and especially clean energy technology -- an investment that will strengthen our security, protect our planet, and create countless new jobs for our people.

I hardly count myself an economic nationalist, or a nationalist of any kind, and certainly not in American terms, but I do think that Obama is generally right about this. Private investment -- business -- is simply not enough. What is needed, as it was back in the '50s, is extensive government investment in everything from health care to education to research and development in next-generation technological innovation.

This is where conservatives get it wrong. No one is saying, let alone Obama, that business doesn't matter, or that government ought to replace business. We all acknowledge that businesses create jobs and for the most part keep the economy moving. But business, taken as a whole, simply does not have the big picture in mind. Business is about profit, about maximizing returns for shareholders. And that's fine. But sometimes you need, a society needs, government to step in and lead the way. Conservatives pretend that this is never the case, or perhaps have convinced themselves that government can never be the answer. This is historical revisionism, a failure to appreciate how American capitalism, and capitalism generally, has evolved over time.

As Slate's Fred Kaplan explains, huge government investment has been behind many of the most significant technological developments and innovations of recent decades, from space exploration (most notably JFK's pledge to go to the moon, ultimately realized less than a decade later) to the microchip to the Internet:

John Kennedy ran for president in 1960, promising a "new frontier" founded on "vigor." Early in his term, he directly responded to Sputnik in two ways: He poured money into the Minuteman ICBM program (both before and after he realized that the missile gap was a myth). And he pledged to land an American on the moon by the end of the decade.

In the spring of 1959, Texas Instruments had introduced a new technology called the microchip. But it was very expensive and generated no demand from the private sector. However, these tiny chips would be needed to power the guidance systems in the Minuteman's nose cone -- and in the coming Apollo program's space capsule.

It was the Pentagon and NASA that bought the first microchips. The demand allowed for economies of scale, driving down costs enough so that private companies started building products that relied on chips. This created further economies of scale. And so came the inventions of the pocket calculator, smaller and faster computers, and, decades later, just about everything that we use in daily life.

None of this was inevitable. It started only because of government investment. Obama made this same point in Tuesday night's address: "Our free enterprise is what drives innovation. But because it's not always profitable for companies to invest in basic research, throughout history our government has provided cutting-edge scientists and inventors with the support they need. That's what planted the seeds for the Internet. That's what helped make possible things like computer chips and GPS."

GPS was initially an Air Force program, designed to make bombs more accurate. The Internet was an internal communication program created by the Defense Advanced Research Projects Agency.

Obama could have gone back further. The first commercial computer, the IBM 1401 of the late 1950s, came about only because the first customers were government agencies, the Social Security program and the Veterans Administration, which required a computer with enough capacity to store data about the millions of Americans receiving government checks.

If conservatives like today's had had their way, none of this would have happened -- or, rather, it would have, but America likely would not have been the leader of the computer age, the American economy wouldn't have boomed as it did, and Americans, along with American businesses, wouldn't have reaped the benefits of such astonishing innovation.

Obama's speech was all about winning the future, as Slate's John Dickerson notes:

He described a challenge to the American dream: The promise of prosperity is threatened by technology and global competition. His pitch was aimed at those Americans "who feel like the rules have been changed in the middle of the game." After sketching this moment of uncertainty, he quickly moved to optimism, rallying the country to its strongest traditions of perseverance and affirming that Americans have always been able to shape their own destiny. His speech was practically a 12-step program for reconnecting the American people with the dream that animated the country at its beginning. 

There is a dark side to this, of course. Back in the '50s and '60s, there was a clear enemy, the Soviet Union, and Americans (and most westerners) rallied against it. But what is there now? According to Obama -- and he's right about this -- the real challenge to America (if not so much to the rest of the West) is not al Qaeda, or Islamism broadly, but emerging economic superpowers like China and India, and perhaps even Europe. A challenge is not necessarily the same as an enemy, but the risk is that the rest of the world will be seen now as the primary threat to America's future, if not to its survival then at least to its standing atop the world. And this would mean vilifying the Chinese and the Indians, among others. Nationalism, after all, isn't just about national pride and a focus on national interests but about exclusion, about "us" and "them." The world is getting smaller and smaller, but nationalism is about building walls, about driving people apart. Is that really the way to do?

Of course, many other governments invest heavily in domestic industry, and so, to an extent, the U.S. would (and should) be no different. So, fine. Go ahead and invest. The problem is, where is the investment going to come from? Beyond Obama's high-falutin' rhetoric, where is the political will for it happen?

Obama did not call for shared sacrifice but instead for bipartisanship. There's a huge difference. It was fairly easy, relatively speaking, to call for sacrifice when faced with the Soviet threat, but now? All President Bush told Americans to do after 9/11 was to go shopping. Obama still clings to the delusions of post-partisanship that characterized his campaign -- whether he actually believes such nonsense is not clear, but what else are we to take from his insistent rhetoric? -- and so merely asks Democrats and Republicans to work together to address the country's problems. He will do his part, as always, by reaching out across the aisle, but have we, has he, learned nothing of the first two years of his presidency. Republicans want no part of working with him or his party on anything. He might be able to peel off a Republican or two here and there, but the health-care debate is ample evidence that Republicans refuse to compromise in good faith.

And so, the merits of Obama's innovation-based approach aside, progress, it would seem to me, isn't likely. Dickerson notes that the president used the phrase "win the future," or a variant, 11 times in his speech. That means that the speech sounded very much like "a self-help seminar," one loaded with typically banal "tag lines from corporate marketing." Yes, he's for more government investment, perhaps akin to what happened in the '50s and '60s, but the message was presented at such a high level that it rang hollow. And as if that weren't enough, Obama indicated that he remains committed to the tax-cut, spending-cut fiscal conservatism of the political center. As Kaplan writes:

Obama proposed, starting this year, to "freeze annual domestic spending for the next five years," a step that, he boasted, would "bring discretionary spending to the lowest share of our economy since Dwight Eisenhower was president."

It's hard to see how he or the Congress can resolve this contradiction -- Kennedy-esque vigor and investment on the one hand, Ike-like torpor and penny-pinching on the other. He said much of this extra money could be freed up by eliminating subsidies for the oil companies. First, good luck on that. And second, that alone won't free up enough.

So where's the money going to come from? Even if he gets Democrats on board -- and he certainly won't get all of them -- there's no way Republicans are going to agree to massive government investment in anything, let alone when they mistakenly think voters gave them an anti-government mandate last year and when they plan on running along Tea Party lines in 2012.

Sure, this was the "old" Obama again, the one calling for the "hard choices" to be made and for bipartisanship to prevail, and he was generally quite effective, and, sure, Americans seem to like what they heard, but where exactly do we go from here? It sounded more like Obama was laying the groundwork for his re-election bid, presenting a nationalistic (and vaguely populistic) vision that appeals to independents, then he was presenting anything resembling a realistic policy agenda for the next two years. (As TNR's Jonathan Chait remarks, the president's "emphasis on public investment reflects less a desire to increase spending on infrastructure, R&D and the like than a platform from which to oppose anticipated Republican cuts.")

That's fine, I suppose -- he needs to run on something, after all -- but it just seems to confirm that nothing is actually going to happen. Even if Americans like what they heard, they don't want their taxes raised and they have a party, the GOP, that is fundamentally anti-tax and anti-government and that will appeal to them along those lines. Americans also oppose cuts to most government programs, including Social Security, of course, even if Republicans refuse to acknowledge this, and so as the country faces political intractability, and as the willingness to accept shared sacrifice is largely non-existent, there just isn't the money for what Obama wants.

Even if this is another Sputnik moment for America, the outcome will be very different. Obama will make his case, Republicans will make theirs, and nothing will change -- except, from time to time, the politicians voters send to Washington.

The decline of the American Empire, already in full swing, continues.

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