A recent column by Larry Summers points at distrust in business and government as the source of slow economic recovery and crumbling infrastructure. Mr. Summers ends:
More important than any specific remedy, there is a reason beyond the media and the public’s own economic problems that there is so much disillusionment with so many institutions. They do not seem to perform as well as they once did. We see it every day. Fixing escalators and building bridges may seem like small stuff at a time of economic crisis and geopolitical instability. But it is time we recognize the importance of what may seem small to what is ultimately important — the faith of citizens in their collective future.So why might have we lost faith? Perhaps because politicians have told us over and over that we should distrust these institutions. One major party tells us not to trust Big Government and that we should starve it of the financial resources that might make it a successful provider of public services. The other major party tells us not to trust Big Business and that we must constrain its ability to grow and provide private employment.
Look – I'm not about to tell you that Big Government or Big Business are without flaws. As companies get big they develop top-heavy bureaucracies and become unresponsive behemoths that beg for government bailouts when things go south. Governments, too, develop top-heavy bureaucracies that serve nothing but their own existence to the detriment of public services and public debt. A business sometimes goes bankrupt; government goes further into debt.
The key policy takeaway is that we not starve the government beast or chain the business monster. Right-sized government must focus on citizen services, not self service that builds the bureaucracy or personal political stature. Likewise good business must focus on good consumer and B2B products and services in a competitive environment that doesn't pick winners or protect losers.