Government, Competition and Innovation

Call it what you want:  free market economy, the private sector, entrepreneurship, Adam Smith's utopian society, whatever - the fact is government can't provide goods, services or economic growth better than the individual entrepreneur or individuals grouped into small companies or large corporations.  Why?  Competition!  Competition releases creativity, innovation, energy and efficiency.  Governments have no competition.  They promise all things to all people - more education, more healthcare, more pensions, more entitlements - the list goes on forever.  In the last 100 years the cost of government as a percentage of Gross Domestic Product has grown to astounding levels.  In Britain, for example, government spending rose from 13%  of GDP in 1913 to 48% in 2011.  And even under the current Conservative / Liberal coalition, the rate has not stabilized - it's still going up!  In America, President Obama has raised government debt to unprecedented heights and still he promises more goodies, more freebies.

The point is,  productivity under a free enterprise system is dynamic and efficient.  Productivity under government control is bloated, static, stale, wasteful, complacent and corrupt.  Without change, it will stagnate under its own weight.  But we need government;  only a fool would argue otherwise.  And we need sustainable economic growth.  So maybe the answer lies in change - a synthesis of both "needs".  I don't have the answers but I do study the possibilities.  I reviewed 2 books.  The first is "The Fourth Revolution:  The Global Race to Reinvent the State",  by John Micklethwait and Adrian Wooldridge.  The authors examine different nation-state models looking to synthesize the best of each.  China, for example, "offers a new model of government that challenges two of the West's most cherished values:  universal suffrage and top-down generosity".  The affluent city-state Singapore, they say, is the "Asian alternative to democracy".  While they admit the Asian models have their faults and inconsistencies, the rest of the world can learn a lot from them, like self-reliance and hard work.

In their analysis of western democracies, they argue that the true spirit of liberalism must be revived:

"More emphasis must be put on individual rights and less on social rights such as welfare.  And it is about reviving the spirit of democracy by lightening the burden of the state.  If the state promises too much, it creates dependency among its citizens;  it is only by reducing what it promises that democracy will be able to express its best instincts of flexibility, innovation and problem-solving.  This is a fight that matters enormously.  Democracy is the best safeguard for basic rights and basic liberties".

Another good book, but on a less grand scale is "Creating Innovators:  The Making of Young People Who Will Change the World"  by Tony Wagner.  The author presents many practical ways that parents, teachers, employers and government agencies can use to draw the best out of our younger generation.  All of them are designed to help the individual reach his / her full potential both as an individual and as a contributor to a better world for all of us:

"What we urgently need is a new engine of economic growth for the twenty-first century.  The solution to our economic and social challenges is the same:  creating a viable and sustainable economy that creates good jobs without polluting the planet.  And there is general agreement as to what the new economy must be based on.  One word:  innovation."