Friday, July 1, 2016

The Disunited State of America - Note for a discussion, "E Pluribus Unum? What Keeps the United States United"

image from article

As nations grow richer, birth rates fall and immigrant labor rises—robbing workers of a sense of security and sowing cultural conflict

By GEORGE MELLOAN, Wall Street Journal
June 30, 2016 7:03 p.m. ET

Judging from the heavy voting for “outsiders” Donald Trump and Bernie Sanders, Americans are in a bloodless revolt against their government. Opinion polls suggest widespread anxiety about the nation’s future—a concern that we are on the “wrong track.”

In “The Price of Prosperity: Why Rich Nations Fail and How to Renew Them,” Todd Buchholz writes that the anxiety is justified, that “nations are just as likely to unravel after periods of prosperity as after periods of depression.” He calls the process “entropy,” a term drawn from the study of thermodynamics. Roughly translated into the vernacular, it means a descent into disorder and chaos.

The author sees in America five entropic forces that can “shatter even a rich nation.” They are, as he lists them: falling birthrates; globalized trade; rising debt loads; an eroding work ethic; and “the challenge of patriotism in a multicultural country.”

Each claim is expansive enough to merit a long discussion, but briefly the argument is that as nations grow richer, birth rates fall, making nations more dependent on immigrant labor to sustain production and wealth. At the same time increased globalization causes dislocations that rob workers of a sense of security. The resulting cultural conflicts and anxiety sow disaffection, weakening the unifying power of patriotism.

Coupled with these forces are the debilitating effects of excessive debt and government-subsidized idleness. Mr. Buchholz contrasts the liberal Social Security and Medicare funds going to today’s retiring baby boomer—$327,000 in excess of what he paid in federal taxes—with what a newborn can expect: “She will pay $421,000 more in federal taxes than she will ever receive in future benefits.”

As to the work ethic, Mr. Buchholz wryly observes that when rich nations begin to shatter, “everyone has a comfy bed—but fewer people have a reason to get out of it.” He cites the rising number of early retirees and a doubling of the number of people who have quit their jobs and filed for disability benefits since 1995.

What is to be done? The author argues that “if a nation wants to survive the gale forces of a swiftly changing economy, it had better convey to its children and to its immigrants a sense of its national character and the rituals and stories that can hold it together.” To restore that sense he proposes requiring that all applicants for citizenship or green-card permanent residency have their passports stamped at no fewer than five historical museums, libraries or landmarks, such as the Gettysburg battlefield or Philadelphia’s Independence Hall. He would impose a similar requirement on anyone applying for a student loan.

More substantively, retirees should get a raise only if the nation’s debt situation improves. The jobless should be given more incentives to find work, such as “mobility credits” for moving to another state to take a job. The list goes on. Readers can decide if these proposals are powerful or practical enough to cope with an “entropy” as devastating as the one the author envisions.

Mr. Buchholz was economic adviser to George H.W. Bush. He has run a hedge fund. He teaches and writes books and is popular with TV talk-show hosts. His book reflects that range of talents in that it has the tone of a provocative and entertaining dinner speech, studded with factoids and witticisms. Acknowledging the bias that earlier generations could feel toward new groups, he notes that Benjamin Franklin disliked Germans and found even Swedes swarthy: “Clearly,” he writes, “he did not foresee a never-ending road tour of screaming blondes in Abba’s Mamma Mia.” Quotes from Woody Allen, Robert De Niro and other celebrities pop up. He does riffs on history’s great unifiers, Israel’s Golda Meir, Turkey’s Ataturk and Alexander the Great. Old-fashioned verities like hard work, honesty and love of country are extolled.

The result is entertaining and informative but a bit glib. For example, rising wealth does indeed correlate with falling birth rates, but it’s not quite that simple. Some poor countries, Cuba and Belarus, for example, have lower fertility rates than some of the richest ones. Mr. Buchholz argues that the U.S. “no longer coheres. We have a thousand television channels, 1 billion web sites and 330 million citizens with no reason to listen to each other.” Communications technology has indeed changed the world, but is it true that America no longer coheres? Anyone with a computer or smartphone has direct access not only to family and friends in distant places but also to an almost endless amount of published information. All sorts of subcultures and affinity groups cohere nicely without fostering strife or dissolution. Whatever one thinks of the election results so far, there’s no lack of public interest and involvement.

The bubbling up of immigrant- and trade-bashing is disturbing and suggests rising, not declining, nationalism. Mr. Buchholz makes it clear that he understands the vital importance of trade. But if protectionists misunderstand his point that the dislocations caused by trade can “crumble loyalties,” they may feel vindicated by his argument, however misguidedly. Trade stagnation costs more jobs than trade dislocations and can “crumble loyalties” a lot faster.

Nonetheless, Mr. Buchholz has raised his warning flags in a charming way. If his aim was to further excite our national anxieties, I’m not sure he succeeds. He has too much good humor to be a wholly effective doomsayer.

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