I have two observations on this passage by Walter Russell Mead highlighting the long-term problem that the Democrats are facing right now with regard to fiscal policy:
…the only real economic policy today that has any chance of working in the United States today is to promote the emergence of small business. Many of those businesses will fail; some will become thriving though never large enterprises; a few will become world-changing giants like Microsoft and Google.
Unfortunately for Democrats, the policies needed to support the emergence of an entrepreneurial, small-business-fueled society are almost the opposite of the classical policies that 20th-century Democratic ideology supports. Large business usually welcomes government intervention in the economy — if only because large businesses have the power to influence the government policies that affect them most directly. Regulations that raise the cost of entry into the market (everything from minimum wage laws, extensive paperwork requirements, taxes, environmental regulations, health care and other social mandates) benefit well-capitalized, large firms who thrive on economies of scale by making it hard for feisty newcomers to emerge and challenge existing product lines and business models.
Simply put, it is this mistake by the Democrats that make statements like Dick Blumenthal’s (see here and here) so puerile. The one useful thing – absolutely one useful thing – that government can do to benefit job creation is negative; it can prevent others from creating or fostering a hostile environment to new businesses. Government can raise a military to keep invaders from looting the countryside every year (and if you think that this is a trivial matter, then you’re an American who has never read any history). Government can create universal standards of weights and measures (and if you think that this is a trivial matter, then see the previous comment). Government can create and enforce a consistent rule of law (which is not the same as ‘sue everybody that moves,’ Dick Blumenthal to the contrary*). And government can produce a decent public transportation network (not the same as ‘public transit;’ also, the libertarians will eagerly argue that one).
Everything else is picking winners; and as Mead notes in the essay above, government is pretty bad at that. So if you’d like to maybe get our economy off of neutral, your choice is pretty clear. Besides, remember this: when you’ve put your car in a ditch, keeping it in ‘D’ and gunning the engine usually won’t help nearly as much as putting the car in ‘R’ and backing up. I know that the President likes to say otherwise… but that’s because he’s an urban public sector type, which means that he’s stereotypically unlikely to have much practical experience with automobiles.
PS: The other observation? Nothing so profound: just that the title of the original essay (“Kausismo or Death?”) amused. I hadn’t realized that Walter Russell Mead was an Eddie Izzard fan.
*Companies love watching their competitors get stuck in lawsuits; every dime that goes to a lawyer is one that doesn’t go into making said competitor more competitive, or attractive to investors. Trust a Democratic politician to think that taking energy out of a system is an infallible way to make it more powerful.