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The 'Mother May I?' State

February 1, 2013 by Carl J. Schramm
The economic costs of TSA have been the subject of endless analyses. We know that nearly 70,000 people are employed to staff airport security checkpoints and that this largely inefficient effort to stop hi-jacking accounts for roughly 4% of the federal personnel budget. But TSA as a government presence in our lives imposes an oblique cost that will prove much more of a threat to our economy. TSA is the most obvious and common encounter when citizens are required to ask permission of their government to purchase a prosaic service — a plane ride. Implicit in the transaction that two million domestic travellers undertake everyday is a discrete determination by government that a routine action is deemed, in each case, permissible. We’ve all heard stories of the irrational exercise of power wielded by TSA personnel, altogether to be expected from time to time when civil servants are given absolute power over others. The strip-searching of octogenarian women comes to mind. The agent implicitly says, “Ask nicely, behave nicely, pack your shampoo neatly or, in our absolute and total discretion, we will make you miss your flight; your granddaughter awaiting your arrival or the business meeting of a lifetime be damned.” We have become routine supplicants of government every time we take a trip by air. Unimaginably, America, the land of the rugged individualist of old, has become a “Mother, may I?” society. There is a hidden and profound danger that such permission-seeking inflicts on America’s famed individual creative capacity. The impulse for individual freedom that animated our revolution resulted in the most creative economic society ever imagined, one built on individual risk taking and performance. Freedom to think the unthinkable brought forth unimagined innovation. American innovations in pharmaceuticals, construction, transportation, and housing have lengthened life and improved living standards. Exported, copied, and emulated, American creativity — expressed in revolutionary new products and services — inarguably has bettered the lives of billions of people around the world. Of course, we rationalize the x-raying, the looking in our private bags, the exposing of our cold feet, the patting down, and the feigned niceties, telling ourselves these things are the price we pay for safe flying. We overlook the indignities, the stupidities, and the chatter about breaks and pensions from civil servants who are, and should be, bored with jobs that require them to perform like robots and deny them discretion to use common sense. Does that overactive and increasingly intrusive government stop at the airport? Unfortunately not. In the name of watching out for our personal welfare, government seems to be force-marching into other areas of private decision-making. The daily menu of our village school system has just been taken over by the New York State Education Department. Every student, every day, will be served specific foods in specific weights deemed required for good nutrition. No more brown bags from home. The local school board has objected, but on the ground of probable food waste. The real objection should be the loss of local discretion when there is no better explanation for this policy than that a bureaucrat decided that our rural district doesn’t know how to develop a nutritional menu, and that moms might slip in, goodness gracious, a peanut butter sandwich made with hydrogenated oils, whatever they are. I suspect, in these parts, that there is a worry that too much oil in the diet will result in a proclivity to endorse hydro-fracking of the Marcellus shale stone beneath us. At the farmer’s market in the village I am told by an entrepreneurial farmer who sells jars of dill pickles that the reason hers are not as crunchy as store-bought ones (a reality she laments) is that the state requires her to cook the cucumbers for so long that they become soft and mushy. At the supermarket in town, I am carded buying striking matches! “But I’m old enough to have grown children, and all I want to do is light the dinner candles.” “I’m sorry, sir, the State makes us do it.” My comment back to the cashier about the obvious limits of state power in the face of common sense is greeted with a stare that suggests the school system is likely more proficient at teaching why the state must control student diets than teaching why individual freedom is so important to our economic success. I don’t even experience the worst of it. My sister-in-law in an affluent Chicago suburb is required to produce a photo ID at the hardware store when she buys a can of spray paint, on the presumption that she might graffiti the BMWs and Mercedes around town. Last year, kids in Montgomery County, Maryland, and Midway, Georgia, were forced to shut down their lemonade stands for operating without permits. In the Georgia case the daily license fee was $50 and the annual vendor fee was $180. In both cases police determined that the pubic should be protected from liquid whose origins were unknown. So now it’s illegal for youngsters to practice business skills in the most time-honored way of all. I reflect upon this from China, where I have been asked to speak about how China can develop a more entrepreneurial culture. The last time I was here, the government had just delivered a death sentence to a young woman, Wu Ying, who had built a very successful diversified hotel, hospitality services, and real-estate company. Her crime, determined ex post facto, was she had taken money from the wrong investors. The only appropriate advice to government seems to begin with “Perhaps if you didn’t kill entrepreneurs…” (Thankfully, Wu’s death sentence was overturned on appeal a few months ago.) America’s greatest advantage is that our country is filled with people who take risks and start companies. We do it because we believe in ourselves and the future we can craft using new firms as our vehicles to personal success while serving others. But the freedom of thought and action that undergirds this relatively unique cultural value is slowly eroding. Experts in public administration, bureaucrats, government planners, and politicians dismiss the secondary consequences of the expansion of the “Mother May I?” state. But they cannot explain, if they even cared to, a few very troubling facts. One is that innovation in our laboratories, measured by reported discoveries per real dollar of support, has been declining for a decade. Second, the number of new businesses being started by Americans annually fell to fewer than 500,000 last year, from a previous 10-year average of about 700,000. These start-ups create most of the new jobs in our economy, and new firms are employing markedly fewer people each year. Third, venture firms, flush with cash, can’t find enough good businesses in which to invest. The result is that fund returns have turned negative for the last five years. Maybe after years of cumulative intrusions, entrepreneurs have started to give up before they even get started. Worse, what is the cost of the discarded idea that just doesn’t seem worth the hassle? Do those kids, who day-after-day know that lunch will be the same for every student because of Albany bureaucrats, leave the cafeteria ready to have wild and crazy ideas that might turn into inventions? Rather than dreaming up new products or processes, they are learning that they had better first consider the question, “Do you suppose the government will let us get away with this?” If government had a track record of success when it plays entrepreneur or investor, maybe we’d think differently. Thomas Friedman celebrates the entrepreneurial bureaucrat. Shouldn’t government, staffed with really smart people, steer innovation along by picking winning ideas? When reality intrudes, this idea doesn’t seem so good. The cost of letting elected politicians and bureaucrats play venture investor is illustrated in recent experience with electric car production. Government’s idea that electric cars are the future has resulted in billions in waste and few happy customers. Bureaucrat-entrepreneurs never considered that 100 years ago the first cars were battery-electrics! Government has taken us back to a future that didn’t work. Of course government can cover up its mistakes, at least for a while. It can make the electric car “successful” as long as it can put $25,000 of subsidy into every Volt and consumers don’t mind paying $300 a month for electricity. When the “car of the future” was still in production, Chevy was selling a whopping 170 units a month! I bet the government officials who backed the Volt think its okay for me to ask permission to get on a plane and buy matches and spray paint, and don’t much care if my very safe pickles are very overcooked.

Author

Carl J. Schramm
Carl J. Schramm

2012 Economic Growth Fellow

Carl J. Schramm is recognized internationally as a leading authority on entrepreneurship, innovation, and economic growth. Currently he is university professor at Syracuse University. For 10 years he served as president of the Kauffman Foundation, making it into the world’s premier organization dedicated to the development of high-growth firms and understanding the role they play in economic growth. He serves as a visiting scientist at MIT and as a fellow of the Bush Institute. He is a Batten Fellow at the University of Virginia’s Darden School of Business and is a member of the Council on Foreign Relations. Schramm's most recent book, "Better Capitalism" (co-authored with Robert Litan) was published by the Yale University Press in September 2012. He has written several other books, including “Good Capitalism, Bad Capitalism” and “The Entrepreneurial Imperative.”

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