Cap Fab - The Utter Fabulousness of Our Capitalist System

Is capitalism and American ingenuity so utterly fabulous that even dedicated redistributionists like the President won't be able to kill it off?  This week's issue of The Economist answers with a resounding YES!  The headlines are dominated with one sort of fiscal cliff story after another, and pressing problems that are within the province of the federal government are going unsolved, but in the states and private industry, great change is afoot that bodes well for our future.  In the leader and a series of articles, the magazine outlines reasons to believe that the American economy is set to grow again despite the dysfunction in Washington.  The bonanza of plentiful natural gas, for example "has largely happened despite Mr. Obama and his tribe of green regulators."  At the state level, to improve their economies various schemes to deregulate are afoot.  (California is not mentioned in the leader, of course.)  

One of the interesting tidbits from the special report on America's competitiveness included the prediction by a number of economists that the cheap energy from natural gas from shale is worth a half-percent per year in GDP growth.  We are still the biggest investor in R&D in absolute terms.  Even the government schools run by the states area undergoing significant change, although, agains, California is not mentioned. 

Seventeen now offer vouchers for use in private schools to some students or give tax breaks to people who donate to scholarship funds. Thirty-eight are experimenting with new pay structures for teachers or principals, often with a performance-related element. 

Because immigration law is fully in the hands of the feds, it is not a bright spot.  I have covered the idiocy of our current policy in this space many times.  The absurdity of a very low limit on H-1B visas (85,000 per year), one of my major complaints, is highlighted in this series.  

In her dystopic novel Atlas Shrugged, Ayn Rand touched on this theme, but imagined a world where those responsible for the dynamism of capitalism gave up.  What she didn't considered in that novel was that technology and innovation might outpace government's efforts to screw things up, making government increasing irrelevant.  If you we buy into the latter thesis, then we see rearguard action, like limiting the intrusion of the ACA, as helpful. Such actions give the private sector enough breathing room to invent a better solution to delivering health care.  Potentially, the delivery of health care under an alternate model might become so economically attractive that people would forego the need for anything but catastrophic health insurance, mooting the entire effort of controlling medicine by controlling the health care insurance industry.  If such an event happens, it will start with the well off experimenting with alternate means of receiving health care and might spread to most of society.  Then government regulators will be off in search of something else to kill off, even if they are never fully successful.