February 24, 2011

∴ USA, Inc.

From Business Insider:
Long-time financial analyst and recent Kleiner Perkins venture capital partner Mary Meeker has just published a 460-page report looking at the United States as a business, providing analysis of the nation's performance and a plan to improve it. Her thesis: technology, infrastructure and education investment have driven 90% of productivity gains over the last 30 years. We should invest public money more heavily in those areas to kick our economy into another era of growth. She cautions that trimming expenses is less effective than raising revenue. In other words, higher and/or more effective taxation, and to a lesser extent, less spending in areas of entitlement.

Everyone agrees with her goals; I agree with her means. Meeker makes a good case for applying business-oriented rules to the problems of stagnant growth, increasing debt and unemployment.

The trouble for her plan is that governments are about people, not profits, and are not run according to business rules. They're run according to politics. When you're tinkering with people and their desires, politics rules the day.

If we were to apply Meeker's logic, we'd not only increase the social security tax, for example, we'd also apply a means test for medicare benefits to eliminate public payment for patients who have their own insurance coverage past age 65. We'd do a lot of things that make good intellectual sense but won't pass political muster.

Government is not business and never will be. We should do smart things, like raising income taxation rates back to the levels employed during the 1990s (remember, we balanced the budget and there was talk of paying down the debt back then as a result) and stop paying for services already available in the private sector, but those actions take political will and a long-term outlook. With a divided government and the political theater taking place today, those things won't likely happen.