Arnold Kling  

The Camden Bobos Proposal

A sort-of Blog to Follow... Greenspan, Bernanke, and Bubbl...

Below is a list of Ten Proposals for the next Administration, which came from a talk by Juan Enriquez. I thought that the main point of the talk is that politicians are dealing in unreality. Certainly, in the debates, every time the candidates were asked what needed to be cut back in view of the financial meltdown, they responded instead by talking about where they needed to spend more or bail people out. This talk threw a refreshing bucket of cold water on that rhetoric.

1. We have to save the dollar (AAA rating in jeopardy)

2. We have to fundamentally and brutally restructure debt

3. All entitlements are fair game. To begin with...

a. If you are 60 to 65 you probably just lost a big chunk of your nest egg.

(we don't want anything from you)

b. If you are 55 to 60, we need two more years' work from you

c. 55 and under, we need three or four more years from you

4. Cut back military by 2% per year for ten years

5. Cap medical costs at 18% GNP (going to be a cat fight, but we need to have it)

6. We have to triage our support for companies (don't attempt to save dying whales)

7. The program has to be bipartisan. It has to make both Dems and Repubs unhappy

8. Simplify and broadly apply Sarbanes Oxley - apply it to government, apply it to hedge funds

9. We will invest in growing start up companies (which create the most jobs - this is where the economy is growing)

10. We will treat education as a varsity sport (and continue to recruit foreign PhDs)

I like (1), (3), (6), (7), (8), and (10)--if you listen to the talk by Juan Enriquez, you will see that treating education as a varsity sport means being willing fire people in order to win. I've been arguing for years about the need to raise the age of government dependency, also known as the Medicare and Social Security retirement age. Enriquez points out that the likely recession means a drop in tax revenues that is likely to accelerate the problems in Social Security. I would add that state and local pension plans are looking particularly sick right now.

I have plenty of doubts about capping health care spending, but in the talk Enriquez puts a lot of emphasis on not being able to pretend that health care is free. As far as I am concerned, if you take away the government subsidies, people can spend whatever they want on health care. I am not sure he would disagree.

On points (2) (9), I want to know what he means by "we." If he means removing incentives to excess leverage and avoiding an ideology that opposes wealth creation, then I'm with him. If he means some form of central planning, then I'm not.

What is interesting is that the audience is pretty far to the left. I refer to them as Camden Bobos. The conference takes place in Camden, Maine, and the attendees exemplify David Brooks' bourgeois bohemians. I did not attend the conference this year, but I have a couple of times previously. I wrote about the substance of the 2003 conference here. I wrote about the left-wing hubris at that same conference here.

So, here was a left-leaning audience giving a fairly enthusiastic reception to a talk that contained a lot of libertarian ideas. I count that as a win.

It will be interesting to see what happens to the wiki that the conference is trying to put together around the talk. I would think that mainstream political types would try to hijack it. It would be a lot more interesting if that did not happen.

Comments and Sharing

COMMENTS (6 to date)
Patri Friedman writes:

Great proposals...but our government is not an incentive system which tends to pass great proposals. It will do whatever it wants. Probably something stupid.

But perhaps I'm overly pessimistic about whether policy can be influenced in positive ways...

eccdogg writes:

To me #4 is the most important. Followed by #3.

When you look at the budget Military and Entitlements are the two biggest cost drivers of the budget so that is where you have to cut if you meaningfully want to restrain spending.

Military should be the first to be cut, because it is the area we are most out of whack compared to other nations and what our true security threats are.

L Burke Files writes:

1. Absolutely - and we do this by acting responsibly with our debt and credit as a nation.

2. Yep/

3. Entitlements are not fair game - they are the only things left to hunt!

4. No - most of our innovation and research for this nation is coming out of Defense Spending. We are the most innovative nation in the world. And when other nations steal our technology - we don't stop them we out innovate them. Agencies like DARPA and yes even the NSA and CIA and Defense Intelligence Agencies drive innovation that come back to benefit us all. Further, we will be fighting more asymmetric wars - both economically and physically. Thus we will need a larger military force - not a smaller one. Just two days ago North Korea threatened to turn South Korea into rubble (again)- we just need to be prepared and not weak. A Weak nation will invite mischief.

5. 45% of medical expense goes to the paperwork and compliance required by the Feds and State Governments and third party payments people. For example - Breast Cancer Chemo treatment in the US - about $62,000 and produces reams of paper for the bills. In Mexico same treatment, from Doctors educated at the same hospital with the exact same medicine, $14,000 - a three-line bill. The complexity of providing care needs to be dealt with first - that will give us cost savings we desire. As for caps - forget them - every project I have ever known that had a cap - the project ballooned right to it.

6. Hmmm whale meat with a krill demi glaze! - Excuse me - Some companies because of strategic reasons will need to be saved from time to time, but not the whole company just the important parts. An example would be GE Electric Boat division of GE, a Boeing, etc...

7. No - we need to replace both the Democans and Repulicrats - and it is happening

8. No!!!! Sarbanes Oxley is a lead weight - the idea was great the execution has been crippling in execution. Instead - require full disclosure - no real disclosure not 3 line resumes of executives and glossy overview crap on their performance. Second - the accounting and risk disclosure should be done by the exchanges not by easily influenced third parties. Last rating agencies - if they are going to be any of them left, cannot accept money from any of the companies they rate - it is a subscriber paid for service PERIOD.

9. Your assertion in 9 is contradicted by the economic realities of your assertion in 8. We need to reduce regulation and encourage business development. Over regulation makes it too costly for smaller companies to effectively deal with the cost of mindless compliance. This creates an effective barrier to market entrance for start up companies. Remove the barriers and create an environment that embraces authentic risk taking and the investment and innovation will grow by itself.

10. YeeHaw! I would even begin with the offer of conditional citizenship with certain degrees from certain universities. Plunder the minds of the world and get them here now.

Keep up the good work.

Burke Files

SheetWise writes:

"Some companies because of strategic reasons will need to be saved from time to time, but not the whole company just the important parts. An example would be GE Electric Boat division of GE, a Boeing, etc..."

You're smoking crack again Burke.

See In Praise of Bankruptcy at Mises. A short quote --

Bankruptcy is a normal part of economic life, covered by laws that guarantee stockholders will be compensated as much as possible. More efficient firms move in to take over what is left of bankrupt firms, buying what can be put to productive use. There is no crime in bankruptcy and, if handled quickly, little economic harm. When the largest US energy company Enron went bankrupt a few years ago, there was not even a ripple in the energy markets, much less the economy. Bankruptcy is not criminal and should not be a surprise ...

L Burke Files writes:

Not crack

Whale meat with a krill demi glaze!

Some skill sets and industries related to defense aret too important to loose. Enron was a reseller of a commodity - so what. GE Electric Boats makes some of the most awesome and complicated war machines and we cannot afford to lose those skills (or several other skill sets / industries) - without having a replacement. Its a defense issue.

As for the rest - bye bye!!!

PS Have you tried Roasted Penguin with a Anchovy Reduction - a bit salty but good.

SheetWise writes:

Burke --

Enough food porn already.

I agree that strategic industries need to be protected -- I just don't like the word "saved" in the current context. The market will "save" the important parts of GE and Boeing even if the parents become bloated -- it doesn't require any government action.


PS -- PM me the penguin recipe.

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