Weighing in on Tom Friedman’s weekend thoughts…

Yeah, I read Tom Friedman’s NYTimes article over the weekend.  Granted, I was sitting in the backseat of our car coming home from RTP trying to get my 8 month old to take a nap, but I did read it.  I thought the Twitter traffic over the weekend and several other posts around the topic were interesting in that some people took Friedman’s thoughts literally and others took them to represent a few larger points.  Here is my basic POV on what I took as Friedman’s larger points:

1. Stop throwing taxpayer money down the drain - stop wasting tax dollars by giving it to a domestic auto industry that is dying.  Here in the South, we lived through the death of the domestic textiles industry – the result was capital shifting to other industries and a resurgence of a new textiles industry based on real comparative advantage.  The auto industry needs to die a controlled death and come back in a different form, a more competitive form. 
2. Plow money into VCs who know how to invest in growth industries – not sure if he was serious about this point or not but I think the larger issue is that government should be removing the friction from the start-up ecosystem.  So, a few important steps toward that end:
   1. The President needs to kill the idea that carried interest should be taxed as regular income.  That reduces the incentive for VCs to make big, interesting bets. 
   2. State pension funds allocating money toward alternative investments should push some of it toward local or regional funds and make a condition that some of that money be invested inside the state.  This provides for a potential double return for the state – good upside for the pensioners and an investment in high wage jobs inside the state.
   3. Get creative about other interesting tax incentives at the federal level for companies getting started in the industries that Friedman points to – CleanTech, General Technology, Health Care IT, etc.
3. America needs to get back to thriving, not just surviving – this is maybe the most important point in the article.  Friedman is 100% right here – we are so focused (with the recent stimulus and our political discourse) on saving the past that we are failing to see this as an opportunity to build a new future.  When so many things are so broken at the same time, it’s a chance to clear away all of the old thinking; it’s a time to renew.  I see America as a desperate, out of work, middle-aged, overweight man (who wasn’t always that way) looking in the mirror – the road he’s on is a dead end.  He can’t just change one or two things, he has to overhaul his life.  He’s gotta stop drinking so much, he’s gotta stop eating pizza every night, he needs to get on the treadmill more than once a year, he needs to quit smoking once and for all, he needs to spend more time with his kids, he needs to pray more, and he needs to pick himself up and get back in the game.  The cycle of trying to make the old ways work, believing that everything will eventually work out – that’s a losing strategy.  He knows it, and he knows that an overhaul will pay huge dividends, it’s just hard to take that first step. 

And so, I take Friedman’s thoughts as a more complex editorial about the test we face as a nation – will we solve this problem using the best things, the rare things that are uniquely American and uniquely at our disposal, or will we retreat into the old ways of thinking?  Thinking that says government can solve our problems, it’s not our fault, we’ve just gotta save this industry or that industry… that’s the thinking of failed, less relevant economies in the Old World.  I hope we ultimately choose the road less traveled – the one that faces these challenges with courage and new thinking and sees an opportunity to come out of this mess in a stronger position.  That’s the America I know! 

Stay tuned…

Tagged as: bail out, carried interest, innovation, stimulus, Tom Friedman, VC