Wednesday, December 24, 2014

Bottom- Up, America! It’s Christmas!

Despite the conceits of New York and Washington, almost nothing starts there. America is a bottom-up society

John Naisbitt(born 1929), America's best prognosticator, in Megatrends (1982)

Every tub must stand on its own bottom.

John Macklin (1697-1797), The Man of the World

Bottom-up, America!

Hold your glasses high! America is on a roll again! An economic boom is on the horizon.

The American economy grew 5.0% last quarter – the largest rate of growth since 2003.

Many things contributed - brisk consumer spending, lower levels of personal debt, a soaring stock market, and plunging gas prices - but the biggest single overarching factor was American innovation from our diverse, flexible, experimental bottom-up society.

In this case, the most single powerful thing may have been fracking, formally called hydraulic drilling and horizontal fracturing.

This approach, led by private entrepreneurs, has made America the largest single producer of oil and natural gas in the world in just a few years. It has turned the world’s economies upside down, with the big losers being Russia, Iran, and Venezuela. It has been primarily responsible for the fall of gasoline prices for 88 consecutive days. It has been the equivalent of a tax windfall for American consumers, for we are a nation that runs on gasoline, diesel fuel, and natural gas. And so does the rest of the world. The number of vehicles fueled this way are predicted to double in the next ten years. Inexpensive energy helps keep the world from groping in the dark, starving in underdeveloped countries, freezing in the North, and sweltering in the South. Fracking may contribute to climate change, but that is a technologically soluble problem, and there is no evidence so far of pollution of our water supplies.

Why did fracking originate in the U.S. and not elsewhere?

After all, the U.S. government opposes fracking and drilling on government lands and the XL Keystone Pipeline and other projects and industries that employ fossil fuels that may harm the environment and warm the climate.

Why did fracking happen in the U.S.?
Because we are a resilient, bottom-up society.

Here is how Bret Stephens explains it (“The Marvel of American Resilience,” WSJ, December 23, 2014).

“Fracking happened in the U.S because Americans, almost uniquely in the world, have property rights to the minerals beneath their yards. And because the federal government wasn’t really paying attention. And because federalism allows states to do do their own thing. And because against –the-grain-entrepreneurs like George Mitchell and Harold Hamm couldn’t be made to bow to the consensus of experts. And because our deep capital markets were willing to bet against those experts.”

It is no secret why America leads the world in big earth-shaking innovations – the Internet, social media, mobile apps, medical developments such as cancer immunotherapy, the decentralization of our health system. It is not our government that makes a difference. between us and the rest of the world. It is our people and our diverse decentralized society. Our success is based on the resilience of our people rather than our reliance on central government. Government can only administer, dictate, repress, regulate, and centralize. It cannot adapt. It is too big and sclerotic for adaptation.

What we are seeing this Christmas is the rise of our bottom-up society. We see it in the the rise of middle-class workers, the return of power to the electorate at local and state levels, the demand for commonsensical results rather than lofty, impractical rhetoric by experts.

As Bret Stephens says, “We are larger than our leaders. We are better than our politics, We are wiser than our culture. We are smarter than our ideas. Enjoy the holiday.”

The path to our success as a nation comes from the bottom-up, not the top-down. The path to compassion for all comes through prosperity for all. That's the bottom-line.

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