Saturday, September 30, 2006


Embarassing failures

We intend to spend most of the day trying to get our game face on by sucking down martinis and depriving our bodies of oxygen in our homemade Gonzalez Gazebo™ (look for the g-man 10 deep and across the middle tonight).

However, for those of you interested in preserving you brain cells and/or spleens, we recommend a column from earlier this week by WaPo business writer Steven Pearlstein who comments on two reports that show the drop in competitiveness in the U.S. and the ascension of such noted "socialist" countries as Denmark, Finland and Sweden.:
These reports speak to the embarrassing failure of a decade of Republican rule in improving U.S. competitiveness. Business taxes, as a percentage of anything you want to measure, are at their lowest level in decades. The Bush White House has subjected new regulations to rigorous cost-benefit analysis. Several reforms make it less attractive for shareholders, workers and consumers to file frivolous lawsuits, but not necessarily for businesses. And in case you hadn't noticed, businesses have already made tremendous strides in shifting health-care and pension costs to workers.

In fact, an alternative reading of the new reports suggests that the business community needs to do some serious thinking about competitiveness and economic policy.

. . .

Let's take the legal system, a negative in both reports. It ought to be obvious to anyone who has followed the asbestos debacle or the medical malpractice issue that litigation has become an inefficient way to police the behavior of companies, executives and service professionals. But the only realistic alternative is regulation by government, which the business community opposes. You can't have it both ways.

. . .

This isn't an economic argument so much as a political one. A totalitarian state such as China may be able to duck these kinds of trade-offs, and there is no doubt Chinese exporters are more competitive as a result. But that is not realistic for an advanced democracy whose citizens prefer to use some wealth, or forgo some economic efficiency, in exchange for safer products and workplaces and more responsive corporate governance.

. . .

Indeed, a reasonable inference from the World Economic Forum rankings is that the best way to compete is to adopt the Nordic model of high taxes, a generous social safety net and lightly regulated labor markets. Scandinavian government spending accounts for more than half the economy, as opposed to a third in the United States. But the reason the Nordic countries score higher in the WEF study is that their governments run surpluses instead of deficits, cave in to special interests less often, operate efficiently and spend their money wisely.

. . .

The business community's fantasy is that the United States would soar to the top of the rankings if only we had Ireland's tax regime, China's environmental controls, Singapore's legal system and Chile's social-safety net. Each policy is part of a complex social and economic model that includes features that Americans, and American business, would find unacceptable. These are package deals, not individual offerings at a dim sum lunch.

This is a crucial moment for the business lobby. Its close allies in the Republican Party may soon lose their exclusive grip on Washington's policy levers. Business leaders can stick with a reflexive anti-government, anti-tax, anti-regulation agenda that has hit a brick wall lately. Or they can move toward the bipartisan center, where they might actually strike a deal or two that could make their companies, and the country, more competitive.
Read the whole thing.


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