News & Views from 465 California Street

American Gridlock

Clint Reilly

Change is supposed to be difficult. Major progress – like reforming a country’s education system or achieving universal health care – takes vision, patience and will.

But it’s not supposed to be impossible.

Especially not for the most economically prosperous, militarily powerful and politically advanced country in the world.

Still, here we are.

Nearly 15 months into the Obama presidency – with huge Democratic congressional majorities – we’re still waiting for health care reform. Our corrupt and broken banking system remains unaddressed. A climate bill? Please.

These are just a few of the big problems now confronting us. Dig a little deeper and you’ll find a rapidly deteriorating education system, a fragmented immigration policy, the looming insolvency of Social Security, and the absence of a rational plan for energy independence.

Conservatives implore the president to slow down, that “America” doesn’t want big change. They throw sand in the gears of government. So, nothing happens at all.

It’s no wonder that a recent poll showed that 86% of Americans believe our system of government is broken. Time and again we have proven incapable of addressing major national concerns without the boot of acute crisis bearing down on our necks.

It’s worth noting that other advanced democracies have proven remarkably adept at achieving real, sustainable change in the absence of impending catastrophe.

Ireland hasn’t been immune to the fallout from the global financial crisis and the effects of a domestic real estate bubble. By all accounts, the country is entering what will likely be a long period of fiscal austerity.

Still, over the past 30 years, Ireland made a number of pragmatic political decisions and crafted strategic long-term policies that should help it recover from its post-bubble malaise.

For most of the postwar period, Ireland lagged behind its European counterparts economically, suffering from high unemployment and inflation, low economic growth, weak schools and a mass exodus of its citizens to greener pastures abroad.

But about 30 years ago, Irish policymakers chose progress over stasis. The scope of their undertaking is virtually unfathomable for Americans today:

To lure foreign businesses to Ireland, they slashed corporate tax rates and offered relocation incentives. They knew that employers would be looking for a skilled workforce, so they retooled the country’s education system and began pumping money into universities and technical colleges.

They revamped their moribund telecommunications network, invested heavily in infrastructure projects and worked concertedly to facilitate harmony between labor and industry. Oh, and they made sure that health care was accessible and affordable for all residents.

Before the recent financial turmoil and the Irish housing collapse, the country had moved from being one of the European Union’s poorest countries – with unemployment hovering around 20% – to among its most prosperous.

Businesses like Apple, Intel, Lucent and Medtronic flocked to Ireland for its low corporate tax rates, educated workforce, superior infrastructure and rational labor policies. For more than a decade, the economy expanded by an average of 6% annually.

Ireland is a tiny, largely homogeneous country. It might be slightly more maneuverable than the U.S. ship of state, but that doesn’t diminish the magnitude of the accomplishment.

The Irish achieved what we have so far failed to do: All interested parties recognized that they shared a common destiny and that wrenching institutional change was necessary to achieve national prosperity.

Despite their own imperfect system, they took the long view instead of trying to score cheap political points at every opportunity.

It wasn’t long ago that the United States – its politicians and its people – had the same perspective. With a shared sense of purpose and trust in our government, we rebuilt postwar Europe, spawned a thriving middle class, created impressive infrastructure projects and advanced social justice around the world.

If we are to continue to enjoy peace, prosperity and global hegemony, we can’t wait for another major crisis before we begin addressing our mounting problems.

By then, it may be too late.

Comments (13)

  • It is simple, and an old, old story. There are always two choices: me or us! To do what is good for me or to do what is for the common good. Selfishness seems to most often win these days, even when in the long run, the common good is better. Ethics and morality don’t seem much to be taught in school these days. Greed seems to be in, even when it results in self destruction down the road. Perhaps we need an “Ethics Fairy” who with her magic wand can go “tink” and now you are ethical and able to make common sense decisions for the common good so all can advance. Wouldn’t that be wonderful.

    Posted by: Don Anthony | March 16th, 2010 at 9:46 am

  • I think it must be a byproduct of my classical Catholic education but I can’t help but think of the demise of Rome when I look at the current dysfunction in Washington. Rome collapsed in large part due to an inability to adapt and evolve. It became so cumbersome and riven by greed and personal ambition among the ruling classes that it imploded.

    Sounds eerily familiar.

    Congress has become paralyzed by fear and the default position for most members is to maintain the status quo and not get blamed for anything. There are lots of people with convictions in Congress (not the criminal kind…though there are those too) but few with the courage needed to go with them.

    Posted by: Matt Regan | March 16th, 2010 at 3:12 pm

  • Hi Clint,
    After reading your article today I sat pondering its content. I think that
    you are completely correct in your assessment of our country. I think that
    perhaps the percentage of citizens that agree with us may be higher than
    you what you stated.
    I continued reading the paper and the next item partly answered the question
    of what is wrong with our society. The article by Cokie and Steve Roberts
    on the next page addressed the system of earmarks and campaign contributions
    that ALL of our politicians just love. And, the Supreme Court seems to think
    that the current system is OK also. Our President, who I voted for, campaigned
    that he would change this corrupt, get filthy rich quick off of taxpayer money,
    that permeates our system. But, it seems that the money is so enticing that none
    of our elected officials are immune to it. And of course every industry loves
    this system also because they get filthy rich as well.
    So, I think that you and I know what the problem is. How do we get our
    elected officials to change the system and get back our moral compass as a
    Regards, Byron C

    Posted by: Byron C. | March 16th, 2010 at 3:33 pm

  • Clint,

    I remember when they started advertising on golf tournaments about doing business in
    Ireland. Without real knowledge, I take offense to the comment “Ireland is a tiny,
    homogeneous country. It might be slightly more maneuverable than the US ship of
    state.” It is ridiculous to say that without more information because that is
    huge. How tiny is Ireland? Smaller than New Jersey? Does it have labor unions?
    Does it have a military? Does it contribute anything to the world peace and
    stability? Does a large super-power keep tabs for them and allow them to have their
    success? Does it have an ACLU? Does it have attorneys? Does it have 15 million
    illegal residents? Are the Moslems trying to blow it up? Does it have a rust-belt?
    I hear the state of Texas is in good economic condition, with a good standard of
    living and maybe comparable to Ireland.

    I guess the problem is, we do not share a common destiny at this time. Too many
    special interests and entities trying to bend the system to their advantage.

    Paul K

    Posted by: Paul K. | March 16th, 2010 at 3:34 pm

  • Clint:

    I Love your column and read it regularly. This one particularly peaked my interest
    as I too have all the emotions of anger and frustration about what is happening to
    this country due to its ultra conservative, very vocal minority against change.
    That original spirit that helped make this country great in favor of change without
    political corruption and greed, is gone. We have become a country that is so caught
    up in politics having so much control of our daily lives, that it has has given us
    an ineffective government that can no longer make the changes that we need to move
    forward with any long term effective plans. We are no longer proactive but require
    major crisis to move towards any change what so ever to begin addressing our
    mounting problems. I blame the “Baby Boomers” for this change of attitude as I am
    one of them. That’s how I can see how what has happened. I can recall when I was
    growing up in the 40s and 50s, all the things you mention about how great we were as
    a nation and how well we the people and our politicians functioned in harmony.
    Today, it’s just the opposite. Our government is totally made up of corrupt, greedy
    politicians who are there solely for for their own advancement and those who have
    lined their pockets.

    Your reference to Ireland, I agree, is a perfect example of how well they have
    handled their affairs to promote growth and prosperity as a nation and this is how
    we used to be. I believe it that takes an intelligent, well informed, population as
    well, which is is severely lacking in this country. Unfortunately, it’s too bad
    that the level of ignorance that has taken over this country is wasting the talents
    of this once in a life time President, Barack Obama. His talent, if nothing else,
    is his intellect and is so apparent especially since we’ve just experienced 8 years
    of George W. Bush, who I believe is a borderline moron. I fear that the comfort
    zone of this country, however, is with someone more the likes of Bush rather than
    Obama and that’s one of the main reasons for this drive to resist change. Obama
    threatens that. We’ve become accustom to fear rather than rational thought which is
    what the conservatives have shoved down our throats and as a result of 911, has
    given them the support they’ve needed as this means of control. That way we can so
    easily be distracted and mislead from the real issues at hand.

    We as a nation, must begin addressing our mounting problems instead of sticking our
    collective heads in the sand. I hope it doesn’t take the next generation after The
    Boomers to wake us up. That’s a lot of wasted time.

    Joel S

    Posted by: Joel S. | March 16th, 2010 at 3:34 pm

  • Clint,

    The goals of change are all laudable, it’s the manner in which they are to
    be achieved that divides the country.

    You aptly cited Ireland and how they lured business by slashing tax rates
    and offering incentives, yet the current administration both in California
    and Washington are pursuing precisely the opposite approach. The people are
    smart enough to see it, why are you and the Democrat majority blind to your
    own referenced findings?

    Erich K

    Posted by: Erich K. | March 16th, 2010 at 3:34 pm

  • Erich,

    Ireland did cut corporate tax rates to 12.5% just about the lowest in the developed world, but that is no secret sauce to longterm economic prosperity. The companies that came have now for the most part left and Ireland is in economic freefall. Ireland failed to grow its domestic economy organically and relied too much on overseas investors who came to make a fast buck and left.

    Cutting corporate taxes to extremely low levels can and should be used as a short term incentive or safety net to either encourage companies to hire or to allow them to keep the doors open, but it should not be the cornerstone of anyone’s economic policy, or the only stone as it was in Ireland.

    A place like California has too much going for it to engage in a race to the bottom with economic competitors who will always beat us on price. We need to be smarter, which means having a better educated workforce, which requires investments in public education, which requires tax dollars.

    Posted by: Matt Regan | March 16th, 2010 at 3:51 pm

  • We, as a society, have become our own worst enemy.
    A combination of ego, selfishness and mere survival are the initial instincts that arise within the human mind whenever the topic of and possibility of change is mentioned, let alone needed.
    With the lifestyle and financial challenges we as a country are now experiencing, our perceptions of these very changes have gone from we to me so much so that we view any/all issues needing to be changed in a very unproductive and selfish manner.
    This will result in gridlock going forward. Positive, productive, beneficial momentum and growth will never be a byproduct of this type of mind-set/existence.
    Yes, change is hard. It brings on a sense of insecurity. That is what the unknown will always do. As long as we continue to hang on to what we have known and hesitate trying what we have not,making changes and thinking differently, countries such as Ireland will just be one of many that will continue to show us what is possible.
    Individuals with the power to make a change to a process not working, those in positions that can bring about change to a situation existing in a negative manner, need to have the courage to move forward doing what is best for the majority and not just a chosen few.
    Ireland has shown that moving forward in a manner that is best for the country as a whole and not individual interests/priorities is the best way to move forward.
    So, here we are, a crippled nation. Staus-quo brought the end to numerous, once prospourous U.S. companies. I pray that this country is not one that is becoming a history of itself.
    I honestly do not know at this point if another major crises will be enough to convince those that need to react to act. We have been allowing and we continue to allow the fear of being politically incorrect to stagnate our nations growth and existence.
    Somebody, please convince me that I am wrong.

    Posted by: Gregg Teal | March 16th, 2010 at 4:08 pm

  • Once again the conservatives are “the bad guys”. Ireland slashed corporate debt, They didn’t go trillon of dollars in debt. There has to be a better way!!

    Best, Helen W

    Posted by: Helen W. | March 17th, 2010 at 1:55 pm

  • Mr. Reilly: I love it! I have never found anything in it with which I disagree. It should be required reading for all. Thank you much. Norma V

    Posted by: Norma V. | March 17th, 2010 at 1:55 pm

  • Helen, there are no “bad guys” there are merely the right and the wrong. History has shown that Ireland’s rapid economic growth was a house of cards. Her biggest natural resource was and remains a very highly educated workforce, paid for by taxpayers. Almost 50% of Irish high school students go on to college and their merit based tuition is paid for in large part by the taxpayer. When foreign companies are attraced by low tax rates they take advantage of this tax payer funded asset and pay nothing back to replenish it. Its an economic ponzi scheme that like all ponzi schemes eventually collapses.

    And I agree, there is a better way out there and for California it can’t be simply about low taxes and cheap labor. Thats a direction we don’t want to go in. We can either be the best or the cheapest, not both. California has always prospered when we’ve been the best.

    Posted by: Matt Regan | March 17th, 2010 at 2:26 pm

  • Read Perter Schiff’s Crash Proof 2.0 and you can maybe realize economics. The US has too much debt.

    Posted by: Ty Webb | March 17th, 2010 at 4:03 pm

  • For some time now, I have enjoyed reading your insightful column and I just want to
    let you know that their are other citizens who share your same concerns and opinions
    as to our Country’s current, and future, state of affairs and towards those who
    are empowered for shaping them. Please keep your thoughtful and timely articles
    coming! Hopefully, others are reading them, too.

    Mark T

    Posted by: Mark T. | March 18th, 2010 at 12:51 pm

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