Nicolas Berggruen is chairman of the Berggruen Institute and publisher of The WorldPost.
The prevalence of a fairly recent idea — that government is an “unnecessary evil” which should get out of the way — has in some ways unleashed the most robust private sector in the world. But purveyors of that belief run the risk of failing to recognize that the U.S. private sector is built and modeled upon the early platform of state investments.
The state has helped achieve a great deal for the United States. Government altered the course of nature with the Hoover Dam, boosted upward mobility by building all the great public universities, connected the nation through the interstate highway system, vaccinated the public against polio and provided a cushion for people through social security and Medicaid. Government sent mankind to the moon. It funded the research that laid the foundation for the digital age and other tech wonders, like GPS.
After the Cold War, as defense technology was exploited for more commercial purposes, Silicon Valley exploded. It now hosts some of the top companies in the world. Amazon has prospered enormously by combining the convenience of online shopping that matches supply and demand with fast delivery of goods — this, of course, is made possible through reliance on the U.S. Postal Service, established by Benjamin Franklin in colonial times. And visionary entrepreneur Elon Musk is essentially taking over the U.S. space program, launching from NASA bases.
Yet by letting the public platform decay, we are disarming America’s future. Even when government was considered a “necessary evil” in the long-standing Anglo-Saxon disposition, the American state has been effective. If not for these government plans and programs, we would be producing cars without roads, trains without tracks and rockets without launch pads.
In and of itself, this festering imbalance between the state and private sector is detrimental to any society. For America, it is worse.
One alarming canary in the coal mine is the present wave of protests and strikes by teachers across the country, from Oklahoma to South Carolina. Something is not right when society trusts these civil servants with the minds of our children but cannot manage to provide them with a living wage.
There are plenty of other indications as well, like the failing bridges and water systems that have not been refurbished for well over half a century or the decrepit New York subway system that can’t find the resources to repair and modernize. In some places, it’s taken decades to build a single bridge. The country’s only high-speed rail project remains stalled in the station after decades of fits and starts.
The United States doesn’t exist in a geopolitical vacuum — a rising power on the other side of the Pacific is challenging its global leadership. In the time it took California to build a bridge and a few miles of overpasses and other structures for high-speed rail tracks in the Central Valley, China has built thousands of bridges and 18,000 miles of high-speed rail with operating trains connecting all the major cities in its vast nation of 1.4 billion people.
China’s present prosperity, like that of other Asian outposts like Singapore, is built upon the millennia-old belief that government is a “necessary good” for society that provides essential services and complements private economic activity. The state invests heavily in infrastructure and education.
Since the “reform and opening up” period after the Cultural Revolution, China has also unchained a vibrant private sector, resulting in commercial giants like Alibaba and Tencent. Working together, the state and the private sector have raised hundreds of millions of people out of poverty and created what Chinese leaders call a “moderately prosperous society.” And they are aiming higher, planning to conquer new technologies from robotics to artificial intelligence, which they see as the motor of the “great rejuvenation of the Chinese nation.”
President Donald Trump is not wrong to challenge China on impeded access to its markets. But no matter how many trade barriers come down, unless the United States achieves a similar balance of public investment and private wealth creation, we can’t compete.
America, of course, exists in a totally different cultural and civilizational universe from China. Adopting China’s system is neither viable nor desirable. But China’s success signals that we should strive, at the very least, for minimal recognition that government is a necessary evil — if not just plain necessary.
We might look instead at what is happening in France today under the post-ideological policies of President Emmanuel Macron. As he heads in the American direction of opening up the dynamism of the private sector from what has been a “dirigiste” state, the United States should head in the direction of the kind of public investment that has sustained France. Its primary education and cultural institutions are first-rate. It has sound infrastructure, including sophisticated high-speed rail. It is shifting toward the Scandinavian model of adapting to innovation and globalization by making its labor market more flexible, while protecting workers instead of jobs through universal benefits.
Macron understands that most value is added to the economy and society through a working balance between the platform of government and the spirit of entrepreneurship. His challenge is to take the shackles off the market. Our challenge, no less formidable than Macron’s, is to reclaim a place for government as a platform of prosperity.
Every successful society needs both a robust private sector and an effective state. America, too, needs to let go of the ideological precepts that are so damaging our prospects and find a way to create balance between public investment and private wealth creation to keep us in the running with China’s present prosperity.