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Andy Stern

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American Idle

Posted: 04/07/11 08:22 AM ET

As the clock ticks down towards a possible government shutdown, or another continuing resolution to put a band-aid on a gaping fiscal hole, our country needs its elected leaders to put aside their intellectual differences and perform the duty that they were elected for. Yet the logjam that has beset the federal government is not a new phenomenon; our very political institutional framework often restrains policy-makers from taking such swift, far-reaching action, even in times of need.

American democracy has layers of power and responsibility, which James Madison rationalized in Federalist, no. 51 as a check against possible tyrannical rule. Our Founding Fathers saw fit to divide power between two strata -- state and federal. Then, within the federal structure, they codified a trifurcation of power to ensure that no single branch came to dominate government; and while power has ebbed and flowed between branches, the system of checks and balances has provided stability, and kept tyrannical rule at bay.

Now, however, in the midst of the transformative change of globalization and this third economic revolution, those layers have become an impediment to making the changes necessary to keep America competitive in the world economy. Today, America crawls along at a snail's pace.

In Demosclerosis: The Silent Killer of American Government, Johnathan Rauch described this problem. Scott London observed, in reviewing Demosclerosis, that "Rauch defines "demosclerosis" as "government's progressive loss of the ability to adapt",credited as a side-effect of the postwar pluralist political system. The dramatic rise of interest-groups, coupled with the public's increasing demands on government have produced "an escalating game of beggar-thy-neighbor that damages the economy and chokes the government."

Rauch's principal argument is based on the work of economist Mancur Olson. Elaborating on classic political economy game theory, Olson showed that rational individuals acting in their own best interests fail to achieve their common or group interests. (emphasis added) Rather than a strength, Olson argued that pluralism was a weakness of American democracy. The sum of all the group interests in a pluralist system, he argued, does not equal the general interest. Rather than allowing for dynamic development, pluralism has institutionalized individual, and group greed.

The current tax reform debate exemplifies this dynamic. The National Commission on Fiscal Responsibility and Reform's official report to President Obama specifically addressed the need to reform the corporate tax code with three recommendations, arguing that doing so was paramount in increasing the competitiveness of American businesses and creating more jobs for Americans. President Obama, in his speech to the Chamber of Commerce on February 7, 2011, spoke of the need for reform, but did not advocate the Commissions' recommendations. Translation: President Obama agrees broadly with corporate tax reform, but does not endorse the specific recommendations of his appointed Commission.

Tom Collamore, writing the Chamber's official response to the President's remarks, articulated that while the members of the Chamber agree on the need for restructuring, they want a "comprehensive conversation on tax reform." Translation: we have reforms and loopholes we care about, but we want small business included. Similarly, Representative Dave Camp (MI), in his official response to the State of the Union, agreed with the President's call for tax reform, but stated that "[t]ax reform should address the entire tax code." Translation: tax reform must be all or nothing. Ron Phipps, President of the National Association of Realtors, articulated that "...any changes to the MID [Mortgage Industry Deduction]...could critically erode... the value of homes." Translation: touching our tax break will undermine any improvement in the housing market.

Mark Rosenman, director of Caring to Change, argued that placing a cap on, or reducing tax exemptions for, charitable donations would "hamper [nonprofits] and their ability to provide the social services [the government] cannot." Translation: no breaks equals fewer services. Steven Comstock, manager of tax policy for the American Petroleum Institute, stressed that oil companies will focus primarily on how tax reform will impact cost recovery. Translation: don't touch our tax break.

While everyone seems to understand that our corporate tax system needs an overhaul to increase efficiency and make America more competitive, one person's reform is another's paycheck. The second best choice of interest groups if they don't get change their way is the status quo. Voilà: demosclerosis.

Our democracy is frozen, calcified like arteries beset by arteriosclerosis. Everyone acting on their own behalf, protecting their own interests, has stopped up the flow of democracy, and as a result, America is falling behind.

Team USA, the world economic champion, is finding it nearly impossible to make the changes necessary to compete in a global economy. It seems we can only act decisively towards the common good when our backs are to the wall.

To cure this condition, we must recommit ourselves to both the common good, and common sense, rather than self-interest. Elected officials must place the next generations' interests ahead of their next elections'. The same sense of mission and spirit of adventure that built this great nation needs to be updated to fit the contours of a new worldwide economic revolution.

Human innovation has long been motivated when we find ourselves on the precipice. We have reached that cliff, and what we need now is to work together to build a bridge to the future.

Matt Kessler-Cleary, a master's candidate in Georgetown's Global, International, and Comparative History program, co-authored this article.

 

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