June 29, 2011

America Strikes Out

What an aging Derek Jeter tells us about a declining United States.

June 26, 2011 marked the 37th birthday of Derek Jeter. On this occasion, sports writer Michael Sokolove’s relentlessly dissected Jeter’s recent rapid decline as a player from his glory days a decade ago. July 4, 2011 marks the 235th anniversary of American independence. In its own way, that day in this anxious year marks a decline in power and influence of a nation that to the rest of the world appears to be past its prime as well.

In one sense, this glum comparison looks to be far fetched. All individuals undergo a cycle of growth and decay that no one can alter or halt. In contrast, nations can be viewed as perpetually young with the youthful and vigorous replacing the old and cautious as the latter group retires or dies off. The decline of a great nation thus depends in large measure on its conscious collective choices, not on some internal, ticking clock. If individual declines are inevitable, national declines need not be.

Epstein
Illustration by Barbara Kelley

Still, there are some disturbing parallels between great athletes and great nations. On this point, it is instructive to read Sokolove’s account of the ingenious ways in which aging athletes seek to stave off the inevitable. Instead of keeping the eye on the ball and hitting it out of the park, they use lighter bats, take shorter strides, fiddle constantly with their stance, and guess, often in vain, where that next hard slider is going to come. But their power is gone, and a succession of weak ground balls replaces the hard hit line drives that manage to find the gaps between outfielders for extra base hits. Range in the field is diminished; fielders move in half a step to compensate for a weaker arm, but the total number of putouts and assists continue to decline. The weaker overall performance generates a new level of self-doubt that compromises whatever physical abilities remain. Players train to excess. Like worn-out tires, they are felled by injuries from which they cannot recover.

All great players do not go into free fall. Occasionally a Ted Williams will have a great year at an age when most players have long retired. With Jeter, though, the signs of decline were evident from last year’s season. This year, his performance is weaker still. It is perhaps a fitting symbol that Jeter, once the most durable of players, celebrates his birthday on the disabled list thanks to a calf injury. When he gets back on the field—and when (or if) Tiger Woods recovers from his injuries—they will be lucky to show the flashes of brilliance that Michael Jordan exhibited as a Washington Wizard. Jeter will likely win no more gold gloves just as Woods is not likely to win any more major tournaments.

Is our national decline as evident to the world as the hitch in Derek Jeter’s swing?

The stumbling pattern of the aging athlete is reminiscent of the vacillation and weakness of today’s American leadership. The secret of success for those nations that are in their prime is that they do a few tasks confidently and well. They run a strong military to keep peace at home and to help stabilize matters abroad. They worry about the maintenance of a simple tax system with low rates, a system intended to create a certain and friendly environment that maximizes returns to capital and labor. They know the importance of the security of contractual transactions and the dangers that come from erratic efforts to jump-start an economy. They praise their inventors, authors, and innovators. They treat excellence as an imperative. They take care of their unfortunates, but do not easily accept excuses for poor performance.

Remaining true to these guiding principles pays large social dividends. It helps shrink the size of government, and it reduces the level of political intrigue that saps the vitality of a nation with one gimmick after another. Like a Derek Jeter in his prime, this great nation masters the essentials of the game and leaves the scraps to others. It embodies a quiet efficiency that spurs individual achievement and wealth creation, which in turn sets the stage for a new round of innovation and improvement.

But that is not the way matters have worked out in the last several years; indecision and economic malaise have been our lot. Like today’s Derek Jeter, the United States constantly fiddles with its swing. Bad ideas in good times have become good ideas for bad times. We are told that we must constantly have stimulus programs to "jump start" the economy so that it can return to its productive ways. But what we get are "cash for clunkers," short-term subsidies to new home buyers, extended unemployment benefits, and an endless set of home loan forgiveness and loan extension programs that never quite allow underwater homeowners to return to dry land.

At the monetary level, we get a Federal Reserve determined to drive the interest rates as close to zero as it can, and when that fails to gain traction, a spiffy program of quantitative easing, which is intended to inject more money into the economy, to no real effect. Then there are our extensive new programs for health and finance whose contours no one can quite understand. And throughout it all, our leaders lamely proclaim that it is just bad luck, not unsound policies, that leave us mired in the muck.

These clever ideas and new programs never seem to work as advertised. So right now, the smart money predicts a double-dip recession in which unemployment rates will continue to hover around 9 percent. Large firms continue to hoard cash, which makes it clear that confidence, not liquidity, is the source of the modern malaise. Intelligent people cannot be persuaded to make long-term investments, when, for starters, every major tax rate is subject to revision, most likely upward, during the next two years.

The housing, labor, and financial markets will remain in the doldrums unless Obama pursues a policy of deregulation.

The dominant response from too many political elites is to double-down on the same flawed policies. The failure of ad hoc interventions is treated as proof that half-hearted programs never can achieve success. And so certain politicians and policy makers argue that we must continue on the same doomed course of action. The Obama administration thinks that no evidence can falsify its jaundiced view of the world.

The weakened situation at home necessarily compromises the position of the United States abroad. Here is not the place to defend at length the decision of the United States to intervene militarily in Iraq and Afghanistan. My own sense is that the risk of destabilization coming from these two countries required some military action, not only for humanitarian reasons, but also to prevent them from operating as bases for spreading mayhem ever closer to Europe and the United States. But what really matters is how that intervention takes place. A strong and confident nation declares that the tasks it begins are the tasks that it will end successfully. It is willing to commit major resources to these ventures today without caveats and hesitation. The key point is that hitting hard early can pay off, but only if our enemies abroad know that they cannot win a waiting game by conserving resources until the United States announces victory—like the death of Osama Bin Laden—only to pull out too many troops too soon afterward.

But this is precisely the course that President Barack Obama has chosen to pursue in Afghanistan. His pre-appointed deadline for withdrawing troops offers our enemies the luxury of choosing their optimal strategy. Ironically, the willingness to pull out today may well require us to intervene tomorrow in order to forestall greater threats closer to home that even the fainthearted cannot ignore. Unfortunately, the Obama administration dismisses our military involvement in Afghanistan as a misadventure. As a result, in the eyes of many, a rapid withdrawal offers large savings with little to no downsides. Reality, unfortunately, presents hard choices that this honey-coated vision ignores.

Bad ideas in good times have become good ideas for bad times.

Obama’s defeatist speech to the nation announcing the accelerated pull out from Afghanistan is a perfect example of the administration’s chosen policy to "lead from behind" on international matters. His decision was reached over the opposition of his generals in the field, all of whom know that such a policy portrays America as a weak nation. And yet, this is the course that the president chooses to follow in Libya as well. Right now, the president’s willingness to "lead from behind" in the Libyan encounter is strong evidence of the diminished expectations that today passes for national policy. A nation intent on shrinking its military presence will not be able to capitalize on the brave words of its leaders that it is resolute and determined to meet challenges throughout the world.

Worse still, we have no reason to be confident that any supposed "peace dividend"—savings from peace—will be wisely spent. Yes, we did spend a trillion dollars in Afghanistan and Iraq over the past dozen years, much of it unwisely. But during that time the whole defense budget has continued to shrink, such that it is now about 3 percent of gross domestic product, down substantially from only a few years ago. The real source of our economic decline lies in domestic economic policies that place ever-greater restraints on private initiative and enterprise.

My great fear is that the peace dividend will be spent in the same foolish way that has led us astray under both Republican and Democratic administrations. It is a mug’s game to think that we must first regulate and tax productive activity in order to provide a safety net for those today who are left behind. That approach only increases the number of individuals driven from the labor market, which in turn leads to yet another round of tax increases, until the cycle continues yet another time. It is far better to depend on a deregulated economy that relies on growth to get people off the unemployment rolls.

Right now American leadership is running scared. We have a president who thinks that bold words can ease our national decline, which has become as evident to the world as the hitch in Derek Jeter’s swing. We will know that this administration is intent on reversing the decline when the word "deregulation" passes approvingly from its lips. Until that time, we should expect to see housing, labor, and financial markets remain in the doldrums.


Richard A. Epstein, Peter and Kirsten Bedford Senior Fellow at the Hoover Institution, Laurence A. Tisch Professor of Law at New York University, and senior lecturer at the University of Chicago, researches and writes on a broad range of constitutional, economic, historical, and philosophical subjects. He has taught administrative law, antitrust law, communications law, constitutional law, corporate law, criminal law, employment discrimination law, environmental law, food and drug law, health law, labor law, Roman law, real estate development and finance, and individual and corporate taxation. His publications cover an equally broad range of topics. His most recent book, published in 2013, is The Classical Liberal Constitution: The Uncertain Quest for Limited Government (2013). He is a past editor of the Journal of Legal Studies (1981–91) and the Journal of Law and Economics (1991–2001).


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