That Used to Be Us_ How America Fell Behind in thted and How We Can Come Back - Friedman, Thomas L. & Mandelbaum, Michael [27]
Jeffrey Immelt, the chairman and CEO of General Electric, one of the largest private companies in the world, noted the dangers to America of the mistaken belief that the government has no constructive role at all to play in the economy: “We worship false idols in terms of the power of the free market. The U.S. government has been the catalyst for change for generations. The National Institutes of Health shaped a generation of leading-edge health-care technology. And all of the defense spending has spawned the nuclear power industry and the Internet.
“I’m a free-market guy,” Immelt added. “I believe in the endless possibilities of individual choice and private initiative. But there’s a long history in this country of government spending that prepares the way for new industries that thrive for generations.”
Warren Buffett likes to make this point about his own spectacularly successful career, explaining that the billions of dollars he has made as an investor have been due in large part to the fact that his career unfolded in America, with this country’s vibrant institutions, free markets, rule of law, and formula for prosperity.
“I was born in the right country at the right time,” Buffett said in an interview on ABC (November 28, 2010). “Bill Gates has always told me if I had been born, you know, many thousands of years ago, I’d have been some animal’s lunch because I can’t run very fast, I can’t climb trees, and some animal would be chasing me and I would say, Well, I allocate capital. The animal would say, Those are the kind that taste the best.”
John Doerr, one of America’s premier venture capitalists—an early backer of Netscape, Google, and Amazon.com—puts it this way: “You have to take risks when you are in a high-speed turn. Sometimes you’re going so fast and the turn is so sharp, your car’s riding on only two wheels. But without risk-taking nothing big happens.” It is the American formula, Doerr added, that provides the underpinnings—in support for basic research that spins out new breakthroughs in physics, biology, and chemistry—that have made America’s venture capital firms so productive in these turns.
It is worth noting that the American formula has been, in no small part, a Republican creation, which means that twenty-first-century Republicans who deny any economic role for the federal government are at odds with their own tradition. Alexander Hamilton belonged to the Federalist Party, a distant ancestor of the Republicans and the opponent of Thomas Jefferson’s Democratic-Republicans (they later renamed themselves Democrats), from which the Democratic Party of today is descended. The Republican presidents Abraham Lincoln, Theodore Roosevelt, and Dwight Eisenhower all significantly expanded and updated the formula. The Republican Party has traditionally favored limited government, but also strong and effective government where it is required.
Lincoln, Roosevelt, and Eisenhower, along with their Democratic counterparts, understood that the challenges of the world they were living in compelled the United States to enhance its national strength and prosperity, and at critical moments they articulated a vision of American greatness that persuaded the public to support, and Congress to authorize, measures appropriate for reinvigorating the formula. That is surely a common denominator among our greatest presidents—the ability to summon the nation to renew its traditional formula at each critical turn in our history.
Alas, the historical record also shows that the formula has expanded fastest and farthest in wartime. When a country is engaged in