Seize the Moment (35 page)

The decline of our human capital is matched by a potential decline in our industrial capital. The debate over whether the federal deficit matters misses the point. A deficit level of over 5 percent of GNP will not bring the apocalypse. But it does represent an important economic choice. Because the deficit is financed through the pool of private savings and foreign investment, we are siphoning off funds into short-term consumption that could have gone toward long-term capital investment. While sustainable, the deficit acts like water eroding the foundation of a strong economy.

We should address the deficit through spending cuts, not tax increases. The deficit exists not because the American people are undertaxed but because the U.S. government overspends. In fiscal year 1988, the federal budget topped $1 trillion for the first time in history. By fiscal year 1992, it reached $1.45 trillion, increasing 45 percent while the economy barely grew 10 percent. Taxes now claim a larger proportion of the GNP than at any time since World War II. To rein in spending, we must disabuse ourselves of the myth that much of federal spending is “uncontrollable.” Apart from interest payments on the national debt, all spending derives from laws that Congress enacted and that Congress can
change. To argue that we cannot tamper with the spending formulas for entitlement programs is to abandon any hope for bringing federal accounts into balance.

Savings and investment are central to our ability to finance industrial expansion and productivity growth. Capital gains taxes are taxes on savings. Payroll taxes are taxes on production. The sensible way to structure a tax system, if our goal is to increase prosperity for all, is to place the bulk of levies on consumption and to reduce the impediments to savings and production. This is essentially the way the value-added tax now used throughout much of the industrialized world operates. As we gear up to take on the global economic challenge, we should consider overhauling our tax system in this direction.

Now that socialism has so visibly failed abroad, we should not let the United States become the last surviving bastion of that discredited creed. In Eastern Europe, once-prosperous nations that were destroyed economically by their Communist captors are now struggling to make their way back to freedom and the prosperity that goes with it. We should help them, but we should also heed the lessons of their tragic experience. We must rededicate ourselves to the competitive, free-market values that have enabled us to become the world's only superpower. If we do so, we can maintain that power and continue to play a major positive role in the world.

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Is the United States worthy to play a leadership role in the world? In a word, yes—and the world needs our example.

Western civilization is not just a condition but also a process. It is a process of striving toward the heights of freedom, creativity, and fulfillment. Through the centuries there has
been one tragic setback after another on the way toward those heights. Some of the most highly developed nations have waged wars of conquest and committed some of the most grisly barbarities in the history of man. Those reversals provide dramatic proof that civilization itself is not a sufficient guarantor of freedom. We have to use the gifts that civilization offers and enforce the rules on which it rests.

One role of a great power is to enforce those rules on the world stage. Another is to set an example at home of what nations and people can achieve if they live by them. Unless the rules are enforced, the example will lose its luster and may itself become a casualty. And unless we set the example, we will throw away all that we have struggled to make possible for our own people and those of all nations. As Theodore Roosevelt observed fourteen years before he became President, “It is not what we have that will make us a great nation; it is the way in which we use it.”

America preeminently represents three values: freedom, opportunity, and respect for the individual human being. These values transcend borders. They rise from the human spirit, and they speak directly to that spirit. They are inextricably linked with the virtues of individual responsibility, competitiveness, self-reliance, and compassion grounded in an understanding of human nature. America's dedication to these values and its practice of these virtues are what, through the years, has given such power and reach to the American idea. They are the source of our strength and cohesion at home. They also give powerful moral sanction to our voice in the councils of nations abroad.

American progress, based on these values, has been spectacular. We are the richest nation in the world. The very poor in the United States would be rich in three-quarters of the world today. We are the strongest military power in the
world. We have the world's best universities. Americans have won more Nobel Prizes in the sciences than any other people have. We have the best medical care in the world, with those abroad who can afford it coming here for treatment rather than using their own countries' nationalized health care programs. We have the most advanced programs for protecting the environment. We have less racial prejudice and more opportunity for all in our society than virtually any other multiethnic nation. That is why the traffic is all one way. Those who want to leave America and live in another country number in the hundreds. Those who want to leave their home countries and live in America number in the millions.

It is vital to the democratic future of the world that the one nation preeminently associated in the minds of others with the democratic ideal should, in the course of this next generation, be an example visibly worth emulating. We have to show democracy not only working, but working well—not just to persuade others that the democratic way is the way to go, but also to demonstrate
how
a democracy can be made to work effectively. Even those who most hunger for democracy are still trying to figure out how best to achieve it. Ours must be an open laboratory that shows how the experiments can work.

In
Democracy in America
, Tocqueville stated that the principles on which the U.S. Constitution rests—“those principles of order, of the balance of powers, of true liberty, of deep and sincere respect for right”—were indispensable. As Europe moved into the democratic age, he urged, “Let us look to America.” At the same time, however, he foresaw dangers inherent in democratic society. The universal obsession with materialism, the ruthless economic competition, the lack of enduring social bonds, and the shallowness of religious and philosophical thought, in his analysis, gave rise
to the danger of a “new despotism.” He feared that because of the lack of economic security in democratic society, individuals would eventually seek that security from the state—which, in turn, would render society dependent on a paternalistic government.

Today, we are witnessing the rise of that new despotism under the cover of “entitlements.” We hear claims that by virtue of living in the United States, a person is “entitled” not only to subsistence amounts of food, clothing, and health care, but to more and more of the amenities of life as well. It is not just the poor who seek these entitlements. Farmers who demand a guaranteed price for their crops, steelmakers who demand tariffs to protect their market share, retirees who demand Social Security payments far exceeding their contributions into the system, students who claim a right to subsidized loans, and dozens of other special interests all seek a guaranteed place at the federal trough. Today, if entitlements continue to proliferate, we risk the demise of the virtues of self-reliance and individual responsibility and the triumph of the new despotism about which Tocqueville warned.

It is healthy for all Americans to strive for the amenities of life, but dangerously destructive to foster the notion that they are entitled to them. People are entitled to an opportunity to earn the good things in life. They are not entitled to receive them from the earnings of others. It is up to them to ensure that what they bring to the market equals in value what they want to get out of it. Entitlement is one of the most ruinous concepts in the philosophical lexicon of the modern American liberal. It saps incentive, builds resentment, and leads eventually to a corrosive sense of alienation and failure among those who are lured by its siren song into thinking that the nation owes them the good life without effort on their part.

There is an enormous difference between a right and an entitlement. We have largely lost sight of that difference in the rush toward a “risk-free” economy in which the government insures us against failure and an egalitarian society in which each is rewarded regardless of his contribution. A right permits us to work our way up, while an entitlement is something society owes us whether we earn it or not. Rights help a society and an economy grow, while entitlements slow its growth and erode its character.

The old hereditary nobilities were, in essence, built on the principle of entitlement. A person was born to privilege, and by virtue of birth alone was entitled to keep those privileges. It is essentially this concept of birthright entitlements that is corroding American society. Liberal egalitarians are trying to impose it on the United States, except they have applied it from the bottom up rather than from the top down. To the extent that they succeed, they reinforce society's other special pleaders in their quest for equality not of opportunity but of results.

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America has other daunting problems at home, and because of them we are far less than we could be and should be. We must seize the moment of freedom's triumph abroad to make America not just a rich society but a good society.

—The richest country in the world cannot tolerate the fact that we have the highest per capita health care costs in the world and yet 38 million of our people are unable to get adequate medical care because they cannot afford it.

—The richest country in the world cannot tolerate the fact that America—with one-twentieth of the world's people—spends almost as much on illegal drugs as the rest of the world combined.

—The richest country in the world cannot tolerate the fact
that we have the highest crime rate in the world and that during the Persian Gulf War almost twenty times as many Americans were murdered in the United States as were killed on the battlefield.

—The richest country in the world cannot tolerate the fact that a permanent underclass has developed that is rapidly making our great cities unsafe and unlivable.

To address these problems, we need not new ideas but a renewal of faith in those that brought us to where we are. From the beginning, this has been a country in which people from every corner of the earth could reach their full potential because it was built on the rock of individual liberty, equality before the law, and opportunity for all.

It has become fashionable, especially in the news media, to measure every effort to deal with America's domestic needs in purely quantitative terms—and specifically to measure it solely by the number of additional federal dollars committed to federal programs that are labeled, however falsely, as cures. This is nonsense. It represents the sort of one-dimensional thinking that gave us the great failure called the Great Society. The Great Society was given a blank check. It bounced. While some of the poor advanced over the last twenty-five years, most who did so succeeded the old-fashioned way—by their own efforts. Most inner-city poor are worse off today than they were before President Johnson launched the Great Society.

If we are both serious and realistic about addressing the nation's key domestic needs, we must make two clear distinctions.

First, the most critical of our social problems—crime, drugs, dependency, education—center on values, attitudes, and behavior. These are not dependent on dollars, and programs to deal with them that are measured in dollars are
often counterproductive. More than dollars we need direction—a clear, forceful set of values and norms that the community accepts and imposes.

Second, a vital distinction exists between a national response and a federal response. From the beginning, the secret of America's success has been that it has not depended on government, but rather has been achieved by private institutions and all the many centers of activity that make up our free society. In most matters that directly touch people, those organizations operate more effectively than the federal government would. And they have the energy, the resources, and the skill to get things done. If we depend on government, we force all concerned to follow the government's rigid prescriptions, on the government's timetable, and through the often impenetrable labyrinths of the government's bureaucracy.

This is not the way a free society is meant to work. And it is not the way a successful society does work. As Goethe observed two hundred years ago, “What is the best government? That which teaches us to govern ourselves.”

One of the key roles of national leadership is to focus people's attention on what needs to be done and inspire them to do it. The more the federal government steps in and does things for people—whether for individuals, state and local governments, school boards, or communities—the less they are going to do for themselves and for one another. The best spur to initiative by the private sector is to let people know that if they want something done, they had better roll up their sleeves and do it. The best role for the federal government is to create conditions conducive to doing it.

Most of our current ills are the direct result of going down the wrong path—of flirting too much with the dreams and doctrines represented by statist, socialist ideals, and in the process eroding the unique and special values that have made
America a great nation. At a time when those who have tried socialism are turning our way, we should not turn their way.

To take one glaring example, we have made a mistake in addressing issues such as the exploding costs of health care in ways that removed market forces from the equation. We have erred by separating health care consumers from any concern about the costs of the care being provided. We need to work out a system that includes a greater emphasis on preventive care, sufficient public funding for health insurance for those who cannot afford it in the private sector, competition among both health care providers and health insurance providers to keep down the costs of both, and decoupling the cost of health care from the cost of adding workers to the payroll.