Is America Number One?

MARTINE KEMPF IS A YOUNG AND ENERGETIC French inventor. She designed and implemented a voice recognition system that permits severely disabled people to drive cars. With a few verbalizations, a car's lights or wipers will activate. The voice recognition system also allows micro-surgeons to control microscopes during an operation through voice commands. Kempf's work received such a positive response that she even presented it to the President of France. However, popular acclaim was not sufficient to overcome French bureaucracy. The regulatory structure in France is so discouraging that a frustrated Kempf fled France for a receptive Silicon Valley. Within a year, her voice-controlled cars were selling around the world. Kempf bubbles over with excitement about America. "This is what I call the land of opportunity. That's fantastic, you cannot get this probably anywhere in the world.:

Andy Bechtolsheim is a German who helped start Sun Microsystems. He does not believe he could have founded Sun in Germany and laments about the difficulty in innovating in his native Germany. The culture is tilted towards trusting in the status quo and self-centered economic stagnation. In Bechtolsheim's words, "Well it's a beautiful place to go and drink some beer, enjoy the scenery but people are basically thinking about their retirement." Perhaps the ultimate destiny of Western Europe is to become a theme park filled will old castles, trolleys, and museums, but devoid of economic energy and innovation.

These are just two of the stories reported by John Stossel in Is America Number One, an hour-long ABC television report. A welcome tonic to the usually Left-wing apologetics of news anchor Peter Jennings, Stossel makes the case that economic freedom, even more than democracy and political freedom, is the key to prosperity. Although Stossel interviews Libertarian economist Milton Friedman and experts from the Heritage Foundation, the theme of the show is a comparison between, India, a socialist economic failure, Hong Kong, a Libertarian success story, and the United States.

A one-hour television report can have only limited depth and can not avoid oversimplification, but there has been a clear sea change in the understanding of economic growth and the role governments play in it. Europe after World War II managed to combine economic and an elaborate social insurance system. The conventional economic wisdom in the early post-war era was that benign government management could balance growth, innovation, and economic equity.

This hubris was crushed under the weight of the stagflation of the late 1970s where managed economies in the US and Europe suffered under what was thought impossible, high inflation coupled with high unemployment. The failure of Japan to maintain its post-war export-based economic growth calls into question the wisdom of government industrial policy. Once mighty Japan ultimately degenerated to a crony capitalism. Finally the collapse of the Soviet Union underscored the futility of central economic management.

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