Friedman: The Open-Door Bailout
Posted by nithi.vivatrat on February 11, 2009
Tom Friedman’s column yesterday opens with an interesting (only partially tongue-in-cheek) suggestion to solve our financial (and housing) crisis: open the door to more immigrants who will buy subprime homes, work hard to pay for them, improve the savings rate, and create new jobs.
As I have told some of you, I believe we do two things better than any other country: entertain (culture as export) and innovate. But we are at risk of being surpassed in the latter area. China and India are producing far more college graduates, especially in math, science, and engineering, than we are. Soon, those countries will be able to throw more intellectual muscle behind innovation than we can. Further, the issues in our public school system will exacerbate the situation (which is why we have to invest heavily in education).
In all areas of trade, protectionist policies might make us feel better (briefly), but they undermine us for the long term. This is especially true when it comes to intellectual talent. We have to grow, invent, and innovate our way out of this mess — we can’t just hide behind walls and wait for it to get better. If we deprive ourselves of necessary scientific and engineering resources, then we make it that much harder on ourselves.
I’ll close with my favorite section of the column:
“Dear America, please remember how you got to be the wealthiest country in history. It wasn’t through protectionism, or state-owned banks or fearing free trade. No, the formula was very simple: build this really flexible, really open economy, tolerate creative destruction so dead capital is quickly redeployed to better ideas and companies, pour into it the most diverse, smart and energetic immigrants from every corner of the world and then stir and repeat, stir and repeat, stir and repeat, stir and repeat.”