INTERVIEW: Small government, big rewards

By Tim Louis Macaluso on December 2, 2009

If you're expecting a lot of business jargon about market share, product channels, and delivery models, you probably won't get it from Mark Zupan. Professor of economics and public policy at the University of Rochester and dean of the Simon Graduate School of Business, Zupan tends to sound more philosophical, even a bit artistic, when he talks about business.

Zupan places enormous emphasis on human creativity and the innate desire to solve problems. The largest contemporary economies, he says, are driven by great ideas, not commodities. America's success, he says, is a direct result of unleashing the creative prowess of its citizenry, not by subjecting it to endless regulatory hurdles. And, he says, the country's at a crossroad.

Zupan cautions against the tendency to look to the federal government for solutions to some of the country's most systemic economic problems: high unemployment, the high cost of health care, and the need for more sources of clean, affordable energy. Instead, he sees business as somewhat cyclical. Companies and their products attract consumers until someone invents something better. Old, uninspired companies fall to what he calls "creative destruction." Government efforts to preserve jobs by preventing this from happening - though often well-intended - are doomed to fail, he says.

Much of Zupan's understanding of economics was shaped, he says, by his parents' experience - immigrants from the former Yugoslavia who arrived in Rochester with only two suitcases. Their eventual prosperity, a result of hard work, would never have happened in the former Soviet satellite, he says, where everything was run by the centralized state government.

The most serious problem facing the US, Zupan says, is its ballooning debt, now topping $12 trillion. A recent New York Times article pegs the cost of servicing all this borrowed money at $700 billion annually. Zupan also discusses the rise of China and India, and why the US shouldn't fear their success.

The following is an edited version of an interview with the Simon School's Mark Zupan.�

CITY: The economic downturn has made this a difficult year for a lot of people. Where do you think the US economy is headed in the next year or two, and over the long term?

Zupan:I believe we've bottomed out, but we haven't seen the job growth, yet.

My worry over the long run is how we've tried to solve this sizeable downturn through government means, because the money doesn't come out of thin air. I was just reading an article today that says New York is one of the states losing the most population, and how the impact is at the high end in terms of tax rolls.

That's a microcosm of what I believe we see playing out. Creative types will ultimately go toward environments that best nurture that creativity. And government, though well-intentioned, doesn't foster the creativity that the private sector does. And it's the creativity that hands down produces the job growth and the wealth.

We've lost millions of jobs during the last 18 months. If we've bottomed out and we're moving into a recovery, is it even possible to create the number of jobs needed to get unemployment down to a reasonable level anytime soon?

One thing to point out: the jobs won't necessarily come back where they once were. It's this element of creative destruction that happens, and you can't forestall it. For instance, for all the jobs that iPhone created, I saw this piece yesterday on Androids. The new Google invention may entirely upend the iPhone's perch.

What I think we should take heart in is just how dynamic the ideas are that people can and do come up with - ideas that you or I don't even have a clue about right now. We have an enormous track record for coming up with new gizmos that will be sources of future jobs in our economy, so long as we continue to foster that creative spirit.

And the education component is at the heart of this. Thomas Friedman wrote a column on the "new untouchables," which basically argues that the folks who can push creativity, who are educated in terms of investing in human capital, are the folks who will hold the least vulnerable of jobs. These folks know how to create value.

How concerned are you about education and its direct influence on the economy?

We've just lived through one economic bubble. To what extent we may have an even bigger bubble ahead because of our education system isn't known. When it comes to getting the basics right, we haven't done a very good job, especially when it comes to language skills, writing skills, and analytic skills. Those chickens look like they may come home to roost.

Craig Barrett, the former CEO of Intel, used to warn about how few people were going into core fields, in particular, engineering, math, and science. We've been able to satisfy that need a bit through immigration.

Many economists believed that if we didn't act quickly, some kind of financial collapse was imminent. But now we don't seem to know how effective those decisions were. Do you think that the bank bailouts were a good idea?

I don't. I think it was a short-run fix. It certainly would have been more painful in the short run. I think there are some important long-run consequences. Not all of them have to do with taxes, inflation, and the debt and how we are going to pay for it.

If people see the lesson in this as - if we screw up the government will just bail us out - you get much less effective risk-taking. Failing is the flipside to risk. One of the things that motivates better attention toward success is failure. When you take out the failure, you get people who are willing to make more outlandish bets.

I would add that this decision [the bailouts] is about not having enough trust. We know that there is pain in life, but people are surprisingly resilient. We don't give people enough credit for their ability to endure and prosper even in the most challenging environments. It's the most wonderful trait we have as human beings.

Yes, but some people hearing you say this, especially if they've just lost their jobs, will think "That's easy for Zupan to say." You're a professor at a respected university making a great salary. What do you know about their pain?

I know; it sounds harsh.

But our system over time creates opportunity, and allows people to rise to the occasion. There are just too many examples of entrepreneurial dreams that were realized out of adversity.

The Japanese didn't have a stimulus plan during their last major recession in the 1990's, a period they refer to it as their "lost decade." This has been used as the reason why the US needed a stimulus plan, and some are arguing for a second. Has it worked?

It's interesting because that was the reason given for the stimulus plan. What's more interesting is they actually did have a stimulus plan. In an economy that was roughly half our size, I think they spent about $3 trillion trying to jumpstart their way out of recession. They engaged in a lot of road repair and bridge building as a way to create jobs.

The key take away was that it didn't jumpstart their economy. If anything, it saddled them with even more debt.

By coincidence, Tim Geithner [US treasury secretary] was there at the time, and his biggest take away appears to be that the Japanese government didn't intervene enough.

So you don't share the same views as the Obama administration on how to get out of this recession and grow the economy?

No, I don't. I think we need to have a little more humility and trust in what common men and women are able to accomplish, compared to a few policy makers.

The US economy was growing at around 2 to 3 percent annually before the recession. But at that rate, how can we service a multi-trillion dollar debt load? It doesn't seem mathematically possible unless taxes are raised substantially, which would further slow growth.

That's a fabulous question; and if there was ever one that should keep us up at night, that's the one.

We take out loans to send kids to college, to buy cars, to buy houses; and the ability to take out loans is a wonderful thing. We can borrow today against future income.

But if we are just borrowing without realizing that it comes with a price, there's a problem. Right now, at the rate we are taking out loans, we must have a very delusional view of our future productivity. I've just never seen productivity and economic growth that could match what the debt obligations are going to end up being.

And health care is going to add to the burden.

In the 1980's there was this hysteria about the strength of the Japanese economy. Of course, most of the predictions were wrong. Now it's happening again with the Chinese economy. Will it soon overtake the US economy?

In some respects they have a long way to go, but in sheer magnitude, by that I mean buying power, they are already number two. And at this pace, sometime in the next few years they probably will be number one.

I think it was three years ago that Shanghai built more office space than New York City in its entire history. That gives you an idea of the pace.

In India, too, you will take off from the airport in Mumbai, and all along the runway are these little shanties in the most abject poverty you've ever seen. But a year ago there were more millionaires in India than there were people in Australia. Every second page of the local paper in Mumbai has a story about education - an engineering school, a new business school. So it's very much a culture that is concerned with: How do we build for the future?

In both cases, these are people who have been freed from all kinds of government regulations. It's kind of funny because they are very much heading away from government restrictions, and we are headed in the other direction.

With these economies growing at such an incredible pace, particularly China's, what will that mean to the average American? Should we be concerned?

In general, we have more to look forward to when that happens than we have to fear. We overtook the British economy. And the average person in Great Britain is better off today because of it.

It's not a win-lose; it's a win-win. When China develops some kind of new vaccine or new technology, we're all going to benefit from their creativity. We have more in common than we think. We should be hoping that they keep succeeding. It's like if your neighbor invents a remedy for the common cold; well, he may become fabulously wealthy from his invention, but you become healthier in the process.

Somebody is going to lose out. The older companies that peddle remedies that don't work may undergo some creative destruction along the way, but that's how it works. We live in a better world when progress occurs.

Still, many people are threatened by China because of its cheap labor market and the way the country manipulates its currency. How can an American, say an automaker, compete? Some people argue we shouldn't even waste resources trying.

There is an element of that argument that is exactly true. But it has to do with the fact that they are so poor right now. But we still benefit from them being willing to work hard.

Our focus has to be on creating our own value.

I used to live in Tucson, Arizona and as an analogy, people there used to get ticked off when they would see Phoenix succeeding. It's human nature. There are sometimes folks who feel they are poor now because you became richer. It creates this downward spiral and you just want to shake them and tell them to snap out of it.

Even those of us who were around for the Japanese auto invasion in the 1970's never envisioned the collapse of the US auto industry and the bankruptcy of GM. Is this kind of change inevitable, and what other industries are vulnerable?

I think any business can become vulnerable. Right now, education is our second largest export. But even American universities are seeing global competition. We have got to stay creative. Our costs are going up faster than the rate of inflation. We can rationalize and tell stories about why that is happening. But at the end of the day, we are an industry, too. How do we use technology to teach more effectively, to stay more mindful? These are the things we need to be thinking about.

The same is true in health care and energy.

What are your thoughts about the health-care reform bill? From a business model, wouldn't it make sense to get health care off the backs of employers?

If we really want to achieve reform, I think a cleaner system would be to give everybody a tax break that they can spend however they want. If they wanted not to devote it to health care, let it be their choice. We need to provide flexibility.

The government option is sort of like having the federal government build cars. It just isn't very successful at these things. We tend to hamstring ourselves and limit innovation when we rely on government.

How has the government earned this reputation as a bungler? There was a time when the US government was a respected brand. Why can't that creative spirit that you refer to flourish within government?

When an organization gets too big, I think the magnitude of inefficiency becomes a problem. When government rallies around a single cause, whether it's to win World War II or to put a man on the moon, it's able to achieve that objective. But somehow those interests get locked in place after the problem has been solved. When interests get locked in, that creates systems that are hard to get rid of, and that puts weight on the whole organization.

Plus, I think that one thing that made the US government such a great brand compared to other governments was that it allowed its citizens to run with ideas. That is the American Dream. We run the risk of doing great harm when we want to see everything run through central hands.

Turning to the local economy, why has the Rochester region taken such a beating, and is there any hope for this area?

It's around the corner. Just through our alums, we are amazed at the number of venture capitalists who are interested in founding future companies. Money follows great ideas. It's there and it's coming. The biggest challenge is convincing our talent to stay in the area and to build their careers here instead of moving to Silicon Valley or Texas.

But it's more important that we have the ideas. And in that regard we are actually blessed with some incredible idea factories - RIT, Roberts Wesleyan, Colgate, and Cornell. We are surrounded by some really wonderful schools. We need to do more to help each other as a community. I'm pretty bullish, really.

The SimonSchool is expensive. What does this school offer that lesser expensive MBA programs don't?

The return on investment over time has been incredibly high.

We're the smallest private school in the top tier. We can offer more personal attention. I can still help students with their job searches. I couldn't do that at Stanford or Harvard. We're analytic economics based. We really believe you're going to need that in order to understand why, for example, the real-estate market collapsed. A lot of our peers don't even require economics.

And third, we're active proponents of markets and entrepreneurship. Over half of our alums 10 years out are entrepreneurs.

For a while, it seemed like everyone was going for an MBA. It was the graduate degree everyone wanted. Now it's not quite as popular. What is the value of an MBA today?

Just having an MBA doesn't mean anything by itself. You still have to push value. You still have to be an effective problem solver. There are no magic bullets with the certificate.

There was a guy at Stanford who argued that sometimes people will invest in activities just to show an employer that they are more productive, that they are a Type-A personality. One of his colleagues quipped jokingly that as soon as you get the admission to a top-tier school, don't attend. Just flash the MBA program to prospective employers to get past the screening process. Our faculty actively resists that kind of thinking. Here we believe in the pickling process.

Comments for "INTERVIEW: Small government, big rewards " (21)

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Speedmaster said on Dec. 02, 2009 at 1:47pm

I always love to read what Mr. Zupan writes. And I see a lot of Julian Simon in some of Mr. Zupan's comments, a very good sign.

Jason said on Dec. 02, 2009 at 4:19pm

I agree we need more innovation, creativity, and humility! Why in the past year Wall Street was so "creative" it "innovated" the unprecedented loss of trillions of dollars and millions of jobs! A splendid display of "creative destruction"! We all need to be more humble, tell government to take a hike, and then sit back and let these creative souls weave their innovative magic and behold the impressive results! Hail to Simon School! Huzzah Mark Zupan!

scott said on Dec. 02, 2009 at 5:55pm

It's "Silicon Valley" not "Silicone Valley". Silicon is used to make computer chips. Silicone is used for breast implants.

rochester99 said on Dec. 02, 2009 at 9:10pm

Mr. Zupan your words reflect the standard conservative corporate philosophy of economics …supporting a rather pure "free enterprise" system with minimal government intervention/regulation. But this system has been proven problematic as the excesses of unbridled greed has manifested itself in numerous Socioeconomic problems in America….the rich get richer, the poor get poorer and the middle class is imploding. Add additional harm to our society…high rates of drug use, high levels of child mortality, excessive levels of crime and a genuine lack of “happiness” because of the “dog eat dog” mentality of our economic system. America is the most “free enterprise” nation in the industrialized world and it has created tremendous wealth…but at a high social cost. There must be a much better system!

If I could create the best economic model for America that balances wealth with a high level of “quality of life”, I would select the Northern European model. What they have devised is a hybrid economic system that combines the best aspects of the free enterprise system with the best aspects of socialism. Even though they have a high level of government intervention/regulation and taxation, they still are a creative, innovative and wealthy society without the social ills of the American Society. Because of high levels of government intervention, just about everyone is highly educated, 100% have full health care, strong social welfare support system (investing in human capital) and a high level of public support for the arts and cultural community. And annually, Northern European Countries are selected among the highest “quality of life” in the World.

Mr. Zupan, I think the economic community must re-assess its position on trashing the role of Government intervention/regulation. It is not an evil force that needs to be minimized. Government can be an extremely productive and helpful tool in creating wealth and happiness for the total society…not just the rich and powerful.

rochgirl said on Dec. 02, 2009 at 10:52pm

What a load of vague BS....creativity and innovation clearly solve all of our economic problems! I especially love the brilliant comparison of the public option to the government building cars. This "interview" sounds like one big advertisement for Simon School.

Doug hand said on Dec. 03, 2009 at 8:11am

Jason - I agree that Wall Street is a den of thieves and has caused irreparable harm to the world economy. Do you think the government had nothing to do with what happened? Have the OCC, OTC, FDIC, Federal Reserve, Treasury Department, etc done their jobs? If you want to have a real rip-roaring time, check out (http://en.wikipedia.org/wiki/Bank_regulation_in_the_United_States) and let me know what you find out. How about the Attorney General (both federal and state)? Aside from Bernard Madoff, how many of the criminals in the financial system have had their bonuses clawed back and been put in jail? I can think of many that have actually gotten promotions and/or are getting giant bonuses this year. That must be just a failing of the "free enterprise" system rochester99 refers to in the next comment.

rochester99 - I am the product of an American public school, so I need your help understanding your post. My knowledge of world geography is woeful, so where is this "Northern European model" located specifically? Is it similar to the European Union? Do they all have the same rules across the board to get the results you mention in the "Northern European model?" Who does the annual "quality of life" survey? The "arts and cultural community" - does it include Elvis paintings on velvet and NASCAR? If so, then it sounds like my kinda place to live!

rochgirl - why so angry?

sal hepatica said on Dec. 03, 2009 at 9:36am

Geez

Why do you give these Simon School types such credibility.
The economistic approach to politics and social life has been discredited for decades.

The U of R is the seat of some of the worst thinking on these matters in the country. Grow up

rochester99 said on Dec. 03, 2009 at 12:25pm

Doug….when I talk about the Northern European Model….I am just talking in general terms about the type of economic/social system that exist in each individual country like Norway, Sweden, Denmark, Finland, and to a major degree in Germany and France. The European Union deals with issues of trade, travel, currencies…etc. Each individual country deals with their specific plans for health care, social welfare, education, housing…etc. But, in general the Northern European countries have accepted the best of capitalism and the best of Socialism…and it works remarkably well….not a lot of super wealthy individuals and not much poverty. Most people appear to be nicely placed in the middle class. Again…highly educated, highly cultured with universal health care. I believe most countries require employees to give 4 weeks paid vacation to all employees…from day one…and it includes Doctors, lawyers and workers at the corner grocery store or maintenance people! Taxes are very high but the government pays a substantial portion of education and health care costs…so individuals have a good amount of net cash left after taxes and they don’t worry about health care/education costs. And most forms of arts/culture/recreation are heavily subsidized.

The “quality of life” or happiness surveys are usually done by the United Nations and many other organizations that measure social trends.

There is no doubt that the American system produces more wealth but this wealth is concentrated narrowly to the top 1% of population….the rest of American Society are constantly in a day to day struggle! Since BIG money controls our society and I see little chance of us gravitating to the N. European model!

Will Condo said on Dec. 03, 2009 at 1:48pm

Perhaps it was in the editing of this article, but did anyone else notice that Mark Zupan failed to answer directly most of the questions asked. Instead, there was the usually conservative economic theory and academic mumbo jumbo that comes from ivory tower oracles. Mr. Zuban would tolerate the total economic collapse of the US banking system and even millions more unemployed and on government welfare if the Detroit automakers went under. How many Simon alums are responsible for the growing number of un-employed and underemployed in the US ?How many have been involved in the corporate decisions that has destroyed US manufacturing ? And talk about total hypocracy, Mr. Zupan should talk to his colleagues at the U of R about refusing to take any more gpvernment money for campus projects ! The U of R can certainly "endure and prosper" without $ millions of taxpayer dollars .

Will Condo said on Dec. 03, 2009 at 4:49pm

Did Mark Zuban actually say that "people in (Communist China) have been freed from all kinds of government regulations!!!!) He'd better call the State Dept. and let them know .

Doug Hand said on Dec. 03, 2009 at 8:17pm

rochester99 - Thank you for the information. Now I understand you are speaking of "mixed economies" as they are referred to on Wikipedia. Of course that is a nearly meaningless term because every economy on the planet is mixed. No true free market, socialist or communist system exists - although Cuba and N. Korea get closest to a "pure" system and I am not impressed. The question then becomes: what are the percentages of the mix? Similar to here in the US, each country you list is constantly re-evaluating the effectiveness of their particular mix.
The main issue I have with comparing the US to Scandinavia (or northern Europe) is scale. Essentially, the Scandinavian total population and economy is roughly equivalent to those of New York State. The drive to homogenize a system for 300 million people just does not seem realistic to me and is not something I would want even if it could be accomplished.
I agree that the concentration of wealth in the US is an issue, and I am a firm believer that the kleptocracy (big government and big business) we live in is getting worse by the minute. It appears the financial and moral bankruptcy are catching up to us. In my humble opinion, we must get back to a system where the decisions that have the most personal impact are made by the people living with those decisions. Washington and Albany - along with their crony "business" associates push into our lives more and more each day and we are worse for it.

Will Condo - Mr. Zupan is referring to the economic freedom that areas of China have now relative to when Mao was in power. Deng Xiaoping took over in 1978 and China has moved toward a more market based economy ever since. The country still has many issues but in general things are much better than during the "Cultural Revolution."

Nathan said on Dec. 04, 2009 at 9:10am

Great points sir. My take is very simple as well: There is only so much room for ingenuity, and thus if the government tries to "hog" it all, it leaves the rest of us out of the planning. Central planning sure as heck looks great on paper and sometimes works on a certain level, but the freedom to make millions of individual choices as a nation vs a few hundred elected elites? I'll take the ingenuity of the former every time.

phantomlord said on Dec. 04, 2009 at 10:56am

Jason said on Dec. 02, 2009 at 4:19pm
I agree we need more innovation, creativity, and humility! Why in the past year Wall Street was so "creative" it "innovated" the unprecedented loss of trillions of dollars and millions of jobs! A splendid display of "creative destruction"! We all need to be more humble, tell government to take a hike, and then sit back and let these creative souls weave their innovative magic and behold the impressive results! Hail to Simon School! Huzzah Mark Zupan!

********************

As opposed to the government, who not only lost $1.5 trillion, but along with the Fed caused 120% inflation, which, in turn, means once the inflation shakes out, you'll have lost more than half of your wealth. Yay government! We'll also overlook the government's role in creating the CRA, ignoring the problems at Fannie/Freddie, etc.

***********
rochester99 said on Dec. 02, 2009 at 9:10pm
Mr. Zupan your words reflect the standard conservative corporate philosophy of economics …supporting a rather pure "free enterprise" system with minimal government intervention/regulation. But this system has been proven problematic as the excesses of unbridled greed has manifested itself in numerous Socioeconomic problems in America….the rich get richer, the poor get poorer and the middle class is imploding.
*******

And it's been that way since the mid 30s, when FDR and the rest of the nanny staters decided that people are incapable of taking care of themselves, and that they need a parental figure in the government to regulate industry on their behalf. It got worse in the 1960s as the government disincentivized going to work and raising a family in a two parent household. In creating the Great Society, it brought the poor up to the level of the middle class, mostly at the expense of the middle class. The tax burdens borne by society since have only increased while the middle class has eroded. Why work if you can live a middle class lifestyle without working? Why work when a third to half of your income goes to subsidize those that don't work and live a lifestyle comparable or better to you?

********
Add additional harm to our society…high rates of drug use, high levels of child mortality, excessive levels of crime and a genuine lack of “happiness” because of the “dog eat dog” mentality of our economic system. America is the most “free enterprise” nation in the industrialized world and it has created tremendous wealth…but at a high social cost. There must be a much better system!
*********

High rates of drug use... you mean rates comparable to those of Europe, South America, etc?
High rates of child mortality... because we count every death, including undeveloped premature babies, whereby other countries only count deaths once a child has been born alive?
Excessive levels of crime... our violent crime rate is lower than places like Great Britain
Lack of happiness because of the "dog eat dog" mentality of our economic system... you mean, having to pay 30-50%, in some cases even 60%, of our income in taxes might make us unhappy? By the time you add in all the levels of nickel and diming, we end up paying a tax rate similar to Europe's.
America isn't the most "free enterprise" nation in the world. By the time you add in federal, state, county and city regulations, not to mention taxation at all of those levels, we're somewhere down in the middle of the pack. Despite being a communist country, the business affairs in China are based more in free enterprise than our own economy.

********
If I could create the best economic model for America that balances wealth with a high level of “quality of life”, I would select the Northern European model. What they have devised is a hybrid economic system that combines the best aspects of the free enterprise system with the best aspects of socialism. Even though they have a high level of government intervention/regulation and taxation, they still are a creative, innovative and wealthy society without the social ills of the American Society. Because of high levels of government intervention, just about everyone is highly educated, 100% have full health care, strong social welfare support system (investing in human capital) and a high level of public support for the arts and cultural community. And annually, Northern European Countries are selected among the highest “quality of life” in the World.
*********

The demographics of Northern Europe are pretty homogeneous too. It's easy to create harmony when everyone shares a common history, a pretty uniform set of genetics, etc. Not to mention having populations of 10 (Sweden), 5 (Finland) and 5 (Norway) million people compared to just NY State at 20 million. Bureaucratic inefficiencies grow exponentially with population size.

It's much harder, logistically, to manage a population of 310 million than it is a populous of 10 million, especially when you factor in that the US has one of the most varied populations (ethnically, genetically, racially, etc) in the world. But, I mean, don't let that sort of thing get in the way of ignoring the fact that the US government, not even counting the states, spend more on research and humanities than any European government, much less the Nordic ones, and let us also not forget that we spend more per recipient on health care and social welfare too.

BTW - look up the methodology of those "quality of life" studies. They're based on the notion that the more socialized the government is, the better your quality of life is. That's a rather bold assertion since.

Oh, and with the whole EU thing, the European Commission is starting to dictate things to its member states that the member states haven't wanted any part of before, much like the US federal government dictates things that the states don't want. Wait until those decrees start making their way down from the top bureaucracy.

***********
Mr. Zupan, I think the economic community must re-assess its position on trashing the role of Government intervention/regulation. It is not an evil force that needs to be minimized. Government can be an extremely productive and helpful tool in creating wealth and happiness for the total society…not just the rich and powerful.
***********

Government IS an evil force, which is why we must restrict it to what is absolutely necessary for society to function. Government, by definition, is the application of force to supplant the will of the individual. When government applies the force you want against others, it is benevolent, when government applies the force of others against you, it is tyranny. Ergo, if the individual matters, all unnecessary application of force, of government, is tyranny.

Government isn't productive, in fact, it is the opposite of productive. Government produces nothing, it only takes. Government spending lowers GDP, it doesn't raise it.

********
rochgirl said on Dec. 02, 2009 at 10:52pm
What a load of vague BS....creativity and innovation clearly solve all of our economic problems! I especially love the brilliant comparison of the public option to the government building cars. This "interview" sounds like one big advertisement for Simon School.
********

Creativity and innovation DO solve our economic problems. New products promote commerce, increase productivity, etc. Tell me, where people better off before or after the industrial revolution? Do you know what life was like for the average person before that era? Outhouses, untold hours sewing, cooking, cleaning, farming, etc just to get by. Everything we take for granted today - electrical appliances, dishwashers, furnaces, easy transportation, refrigeration, our homes, food, etc are all a result of creativity and innovation.

*******
sal hepatica said on Dec. 03, 2009 at 9:36am

Geez

Why do you give these Simon School types such credibility.
The economistic approach to politics and social life has been discredited for decades.

The U of R is the seat of some of the worst thinking on these matters in the country. Grow up
***********

Economistic? Is that even a word? Why are all politicians, regardless of whether they're a lassiez-faire capitalist or a totalitarian communist, concerned with the impact of economics on politic and social life if it has been discredited?

********
Will Condo said on Dec. 03, 2009 at 1:48pm

If anything is too big to fail, it needs to be broken up rather than reinforced, and that includes the big corporate banks. I wonder how they got that big? They NEED to fail or they'll always be an albatross around our necks. Sure, it would cause immediate short term pain, but in the long run, it's what is most healthy for us, kinda like chemotherapy sucks, but it provides a better life for us than suffering from cancer.

And yes, big auto deserves to fail too... they were the ones, both the management and labor, that set their companies up to fail. Why should someone who is already out of a job, like me, be forced to subsidized people that have been overpaid and have an overly generous benefits package?

We spent $1500ish billion on just stimulus and TARP. That's about $5k per person. What is going to stimulate the economy more, "saving and creating" 1 million new jobs (to use the White House's inflated number) while losing 4 million more, at a cost of $1.5 trillion, or giving everyone $5 grand to spend how they want? A family of four having an additional $20k to spend would do a lot to stimulate the economy and shore up the banking system. Those in arrears could have caught up with or paid off their debt, people that need a new fridge or car could have bought one, and people that didn't immediately need the money could have invested it (boosting the stock market by giving businesses more capital to invest in new products, starting their own business, etc). What the government did wasn't stimulus, it was a quid pro quo, a favor from the current government in power to those who put them in power. Big banking, big auto, the labor unions, etc overwhelmingly support the Democrats and the Democrat's economic plans have overwhelmingly supported their backers. I wonder which would be more fair, giving all that money to a select group of people, or giving it to everyone, letting the market work things out? Now that Cash For Clunkers is over, the auto industry is in a slump, and will be for the next few years. How's that working out?

While we bemoan the practices of MBAs that have undermined business in America, usually by caring more about short term results to boost the stock portfolio and trigger bonuses at the expense of long term profitability and viability, shouldn't we look at the unions that demanded contracts which benefited their members in the short term but ultimately caused their companies to collapse as well? Shouldn't we look at what the government is doing too, trying to stimulate the short term economy at the expense of the long term health of the country? We're $12 trillion in debt with an additional $100 trillion in obligations and ran a $1.5 trillion deficit this year... sooner or later, that's going to bite us in the ass too... if you think Big Banking or Big Auto was too big to fail and would destroy the economy, wait until we go all Weimar Republic and the economy collapses from government mismanagement. If the Weimar Republic is too esoteric to look up, how about modern day Zimbabwe? You think things are bad now, just wait until the Cloward-Piven strategy collapses the national economy... then we're really in for pain.

Will Condo said on Dec. 04, 2009 at 1:15pm

Doug Hand : To say there is "economic freedom" for individuals in Communist China is like saying there was freedon in Nazi Germany-which Henry Ford and other American capitalists indeed did say because the country was run more efficiently(democracy is messy.)The government in China, unlike India or Brazil, manages just about everything. Yes, 1.5 billion people may have a bit more freedom to become comsumers, but the government has majority stakes in manufacturing, energy, transportation agriculture, communications, etc.. If this is what Zupan wants the US to emulate, then we are indeed on the road to government control of every aspect of our economy and social lives.

rochester_veteran said on Dec. 05, 2009 at 2:05pm

Dean Zupan speaks the truth about what makes America great, human ingenuity.

Government has its role, but shouldn't be the answer.

Free people shouldn't be dependent upon the government to be their "daddy" figure. Those who propose that scenario are statist sycophants and collectivists, seeking to loot you of your hard-earned wealth to fund the socialist state.

Socialism has always failed.

rochester99 said on Dec. 05, 2009 at 7:48pm

People have lost the concept that Government is a “collective us”…its not some foreign entity. When one attacks our government…or demonizes it …such attacks are first unpatriotic and second its attacking oneself! We have a process called a Democracy where voters have a majority say on how Government functions. The problem we have is the majority of Americans don’t vote or don’t participate in the process…thus the wealthy and powerful (conservatives/Republicans) in our society has taken a greater control of our government. This is why the rich are getting richer, the poor are getting poorer and the middle class is imploding. The masses…middle class and the poor…benefits from a large, responsive government and unless “Rochester_Veteran” is a multimillionaire, he/she will also benefit from government.

Now I do not support a pure socialistic society...just as I don't support a pure free enterprise system. There must be a hybrid system between the two. As I had stated before, I believe Northern European countries have found the "sweet spot". I would say that in general government can better fulfill our basic needs (education, health care, security ...etc.) whereas the private sector can best supply our "wants".

But again…government is not an evil force….government is a “collective us”!

rochester_veteran said on Dec. 06, 2009 at 10:54am

rochester99 posted:

"People have lost the concept that Government is a “collective us”…its not some foreign entity. When one attacks our government…or demonizes it …such attacks are first unpatriotic and second its attacking oneself! We have a process called a Democracy..."

Perhaps in the old Soviet Union, the "collective" was the model, but it's never been that in a free country like the United States. BTW, "collectivism" as practiced in the Soviet Union, killed 6,500,000 kulaks! This act was as evil as it gets and was perpetrated by a (big daddy) government that thought it knew better than the people.

BTW, the United States is NOT a democracy, it's a Constitutional Republic.

Our Founding Fathers experienced a repressive government and attempted to put it in it's proper place. They warned us about the evils of big government.

"When the people fear their government, there is tyranny; when the government fears the people, there is liberty."
--Thomas Jefferson

It would behoove us to follow their advice and to defend the Constitution and roll back government to it's proper role:

“What more is necessary to make us a happy and a prosperous people? Still one thing more, fellow citizens -- a wise and frugal Government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned” and, “If we can prevent government from wasting the labors of the people, under the pretense of caring for them, they must become happy.”
--Thomas Jefferson

Give me liberty, or give me death!

r said on Dec. 06, 2009 at 6:47pm

Rochester_Veteran….the tyranny that I and you should be concerned about is the concentration of international corporate power that has substantial influence over every aspect of our lives. Multinationals that control the media, health care, food supply, the financial service industries, energy…etc. have substantially more power and future tyranny than any government.

When Jefferson spoke of the threats of big government, our society was in essence an agrarian society…rural …and individuals were independent in controlling their food supply and their basic needs of life. That life style does not exist today. Individuals like you should look at government to “support” you in the battle with mega corporation/big money’s dominate influence in ones everyday life!
The only concern I have with government is that the average individual does not get involved with every aspect of our democracy/republic….thus abdicating the power to Big money and big corporation who through lobbying and corporate/personal political donations can dominate/control government. When you have only a minority of people vote during an election…and are typically not involved between elections…this is a breeding grounds for government out of control…in the hand of big money/big corporations.

So Rochester_Veteran….focus more of your concerns on the excesses of the rich and powerful private sector …rather than our system of democracy. Again…government is not an evil force. It can help to protect us from the true tyrants in our society. But it will help us only if we actively participate in our Democracy.

Billy said on Dec. 07, 2009 at 11:04am

Well - There is a point here. The level of jobs in this country is not likely to return to the level it was at. I think we all need to recognize that - regardless of what political party you are from.

Also - I think both sides will agree that the debt level in this country is not healthy or sustainable.

So given both those facts, I guess we just all disagree about how to get the jobs back and reduce the debt. That's where the fighting begins.

Doug Hand said on Dec. 08, 2009 at 11:56am

Will Condo �" “To say there is "economic freedom" for individuals in Communist China is like saying there was freedom in Nazi Germany-which Henry Ford and other American capitalists indeed did say because the country was run more efficiently(democracy is messy.)”
Your comment goes way off on a tangent from my point, so I will try again. My understanding of his point is that as China has moved FROM total central government control of the economy TOWARD 'freer' markets, things have gotten better for them. That is all. If you want to discuss that with Mr. Zupan try calling the Simon School and schedule an appointment.

r - “When Jefferson spoke of the threats of big government, our society was in essence an agrarian society”
True enough. He wanted to keep the power local (state level at the most) and not give it away to some distant group of politicians (federal government.) Some have said this was because of his desire to protect the wealthy planter class of Virginia (of which he was a member) from supporting other states. Regardless of his motivations, I agree with the concept of local control.
“Again…government is not an evil force. It can help to protect us from the true tyrants in our society. But it will help us only if we actively participate in our Democracy.”
By this logic then it is also true that there are no evil corporations and they can help protect us from evil tyrants in our society. A corporation is merely a piece of paper in a filing cabinet or an electronic file on a server somewhere. Both corporations and governments are made up of people, so the idea of blaming large corporations or big government is pointless. We the people are to blame.

A thought for you �" In a democracy the idea is that everyone's vote counts the same. So does that mean that my vote plus your vote makes us twice as powerful as Warren Buffet or Michael Moore or John McCain or Barrack Obama and his one vote? If I vote and become more active I can equal their influence?
“Democracy is the theory that the common people know what they want, and deserve to get it good and hard.” - H. L. Mencken
Just a thought.

rochester99 said on Dec. 08, 2009 at 2:16pm

A corporation is much more than a “mere piece of paper filed in a cabinet”. Sure corporations are made up of people….but realize that a corporation is without a soul or morality and individual officers in a corporation are obliged to focus only on a quarterly statement….to maximize profits and answer to the financial markets daily expectations. Stocks now are no longer “investments”…they are “traded” daily in a millisecond! To ensure these corporation entities don’t take advantage of labor (unsafe conditions, over working, minimum wage requirements) or poison the environment, we have government regulations.

And again…a government is the manifestation of every individual voter….not a separate/evil entity. Without a strong central government, rich individuals and large corporate entities would have much too much control over our society…which is happening today. Thus the rich are getting richer, the poor are getting poorer and the middle class is imploding. Government is the only way to temper the excesses of a “mere piece of paper”!

And it’s irrelevant about the concept of one person/one vote in today’s society. If a person is rich and powerful …they can saturate the media with biased facts…greatly affecting the outcome of an election. They are much more powerful than one vote…they can affect thousands of votes. Such a rich individual can also expend massive dollars towards lobby organizations that again controls all levels of government for their personal or corporate gain. Until we resolve the issue of campaign/lobby reform/limitations…within the context of our constitution….I see little progress for the average Joe/Jane in America. A smaller central government or more “local government control” is definitely not the answer! ….it would make the current inequalities much worse.

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