Two interesting columns from David Brooks

Mr. Brooks argues that in order for the US to compete in the next century, the federal government must act like a university

So it is with government in an innovation economy. Entrepreneurs, corporate executives, line workers and store managers handle the substance of the economy. Government tries to nurture settings where brilliance can happen.

First, government establishes an overall climate, with competitive tax rates and predictable regulations and fiscal balance. Tax rates don’t have to be rock bottom. Companies will pay more if there are other amenities to compensate. But everything should be structured to nurture new business formation.

Then government actively concentrates talent. City governments are used to thinking in this way, while national governments lag. For example, Robert Steel, the deputy mayor of New York City, gave an excellent speech on Dec. 16 on how to build a bioscience center in Brooklyn and how to build an engineering center on Staten Island or Roosevelt Island. The speech was about using government to build hubs.

Finally, the government has to work aggressively to reduce the human capital inequalities that open up in an innovation economy. That means early and constant interventions so everybody has a chance to participate.

President Obama exists because his father was drawn to study in the United States. Obama embodies America’s nascent role as the crossroads nation. Let’s see if he can describe the next phase of American greatness.

Mr. Brooks argues that the federal government needs an achievement test

The best way to measure government is not by volume, but by what you might call the Achievement Test. Does a given policy arouse energy, foster skills, spur social mobility and help people transform their lives? Over the years, America has benefited from policies that passed this test, like the Homestead Act and the G.I. Bill. Occasionally, the U.S. government has initiated programs that failed it. The welfare policies of the 1960s gave people money without asking for work and personal responsibility in return, and these had to be replaced. The welfare reforms of the 1990s involved big and intrusive government, but they did the job because they were in line with American values, linking effort to reward.

Over the past few decades, Americans have waged political war as if all that matters is the amount of money going into federal coffers. The fights have been about “cutting government” or “raising revenue.” But amid this season of distraction the entire society suffered a loss of values and almost nobody noticed until it was too late. Both business and government started favoring consumption and short-term comfort and neglecting investment and long-term growth.

This hasn’t been a case of government corrupting capitalism or vice versa. The two have worked hand-in-hand. The government has erected a welfare state that, as Matthew Continetti of The Weekly Standard has pointed out, spends vast amounts on consumption (Medicare, Medicaid, Social Security, interest on the debt) and much less on investment (education, research, infrastructure), while pushing the costs on future generations. Meanwhile, the private sector has encouraged a huge increase in personal debt to fuel a consumption bubble. The geniuses flock to finance, not industry.