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Thomas Friedman's (Slightly Maoist) Great Leap Forward

07/24/2012 12:42 pm ET | Updated Sep 23, 2012

The business press wins over its readers with stories that inspire -- above all, the story of the inventor in a garage and her company that will change the world. Thomas Friedman has inspired millions of readers with that story over the years. Recently, though, he's stepped out of the ranks of mere commentators to offer a sweeping economic vision for America. What's the vision? Inventors starting companies in garages, of course.

But wait, isn't that the Tea Party's vision: the next Google or Facebook starting up in a garage near you -- no, in your garage! -- if we can only get the government out of the way? And Tom Friedman is a New York Times liberal, isn't he? So what's going on?

The difference is that Friedman sees a big role for government in his "start-up in every garage" economic program. He's a true believe in his program and is pushing hard in three interesting and radical directions that are worth watching. While I applaud his new radicalism, we need an economic program that is both radical and practical.

Friedman proposes that Obama -- or the third party candidate that he's been publicly fantasizing about -- invest trillions to turn America into one big Silicon Valley from sea to shining sea:

We need everyone starting something! Therefore, we should aspire to be the world's best launching pad because our work force is so productive; our markets the freest and most trusted; our infrastructure and Internet bandwidth the most advanced; our openness to foreign talent second to none; our funding for basic research the most generous; our rule of law, patent protection and investment-friendly tax code the envy of the world; our education system unrivaled; our currency and interest rates the most stable; our environment the most pristine; our health care system the most efficient; and our energy supplies the most secure, clean and cost-effective.

This is in part an old and tired liberal story. In it, every nation is like a debutant at a 19th century ball, putting on a show for the eligible bachelors. Which one will choose me? Capital will only dance with the countries in possession of the most highly educated workers, speediest transportation networks, lowest tax rates and most pro-business regulations.

Friedman is not exactly telling that same old story. He's saying that we should go out on the dance floor, get half naked and do keg stands to attract capital. But somehow he makes it sound dignified.

The first of Friedman's three recent departures from the establishment is that he's proposing extremely radical action to attract capital. This is unusual. Most liberals don't really believe that America has a chance anymore. They think we are past our prime. Why would capital ever choose us over all those young, fast economies like China and India? Therefore, they tend to support token efforts at reform: a few billion here, a couple of billion there -- just enough to say you did something at election time. Friedman, however, is truly convinced that with massive investments in education and infrastructure, and radical new taxes, regulations and incentives, that America can get her groove back.

His second interesting departure is his call for a serious third party presidential candidate to champion his program. In his most recent book, That Used To Be Us, he calls this tactic "Shock Therapy." He doesn't expect his candidate to win, but to shock one of the two establishment parties into action. Of all the people to break the post-Nader taboo against third party flirtation, I wouldn't have expected Friedman. But here he is, actively laying out a semi-realistic plan for someone to run as an independent -- and actively agitating for it. He's used his columns to plug some existing third party efforts and has become a virtual stalker of New York Mayor Bloomberg in this cause. He knew the consequences for such a stance, and he's been roundly criticized for it. I believe this shows that Friedman is a true believer. He cares more about America's future than his own, and that makes him a beautiful rarity in the ranks of American leaders. (I want to see him take up his own cause and run in 2016!)

Those first two moves are pretty impressive for an establishment opinion maker. The third is flawed: Friedman has attached himself to a fetishistic economic dogma that recalls Chairman Mao's Great Leap Forward.

After capturing power through a decades-long guerrilla war and finally establishing a stable central government, Mao surprised his colleagues and the world by sticking to communist idealism even at the level of national economic development. He was expected to build large, centralized industries just as all other industrial countries, both communist and capitalist, had done. Instead, Mao called on the people of China to accomplish the industrial revolution in the form of a million start-ups in their back yards (few garages in China back then). With half the population pulled away from food production before China's agriculture had been modernized, the result was millions of deaths.

I'm not suggesting that following Friedman's policies will kill millions. And anyways, our political traditions are strong enough to prevent any leader from demanding that every able-bodied citizen create the next Facebook in their garage...or else. But even without the genocide, it's still wrong.

Friedman explains that most new jobs are created by, "start-ups." Maybe that is true now at a time when hardly any new jobs are being created, but it doesn't add up to many jobs at all, and certainly doesn't add up to a mass of economic energy great enough to restore America's prosperity. And I assume that the statistic that he (should have) cited includes all new businesses, not just fancy high tech ones. Where I live, de facto businesses are created all the time when people without access to decent jobs find ways to make ends meet by providing services to their neighbors. Few of these "businesses" would ever qualify for anecdotal column inches in Friedman's column.

I don't mean to steal the thunder that small businesses deserve. Human beings are creative and entrepreneurial by nature, and Americans especially so. Every big industry started with a small business. But prosperous national populations need both large scale industries and small businesses. A nation can not live on hip Internet start-ups alone.

As an Internet person, I've spent a good chunk of my life around start-ups. Most of the inventors involved would not share Friedman's illusions of national economic salvation through small companies who mostly are striving simply to sell out to larger ones. They know the odds of success even at that humble objective are minuscule. At least a thousand people invented Facebook before Mark Zuckerberg. Dozens succeeded beyond their wildest imaginations. Then Zuckerberg put them all out of business. Facebook -- perhaps the biggest game changer the Internet has produced for the human race -- now employs about 6,000 people and has turned -- and is turning -- many times that number out of their jobs at failed competitors.

Friedman says, "The days when Ford or G.E. came to town with 10,000 jobs are over. Their factories are much more automated today, and their products are made in global supply chains." But what could be more automated and globally sourced that companies like Facebook? A handful of Internet start-ups have transformed human life itself, with tiny handfuls of staff people. They're giving us cool stuff to look at, not a reliable national means of making a living.

Friedman's fetish for decentralization and bottom-up economic growth is actually a global phenomenon shared not only with the remaining four or five Maoists on earth, but everyone from conservative and neo-liberal economists to the protesters of the Occupy movements. On the precipice of global economic depression, almost the whole world is stuck in this dogmatic ideological rut.

Stay tuned for some ideas about how we can get out of it.