Forty years ago to the day, in a basketball game for the ages, Notre Dame ended UCLA's 88-game winning streak, scoring the last 12 points to topple the Bruins 71 – 70. There were numerous sub-plots to this amazing story, many of which have been chronicled by ESPN's commemorative special, "88 and 1." UCLA was loaded with All-Americans, including Keith Wilkes and Bill Walton, and was heavily favored going into the game. Upsets of this magnitude always start with a dream, shared by a coach or star player, and in this case, that dreamer was Notre Dame's head coach, Richard "Digger" Phelps. Supremely confident, Digger was convinced that his team could beat the Bruins, and to instil confidence in his players, he had them cut down the nets during practices leading up to the game.
I wonder sometimes, whether America still has the audacity to dream big. The pursuit of the American Dream has been the foundation post of all that we have accomplished as a nation during our relatively short history. Today, based on a few disturbing trends, I am concerned that the American Dream is no longer.
Case in point… For the first time ever, the United States has dropped out of the top ten most economically free countries, based on the 2014 Index of Economic Freedom published by the Heritage Foundation. This index covers specific categories related to five areas:
1. Size of government
2. Legal system and property rights
3. Sound money
4. Freedom to trade internationally
5. Regulation
The U.S. is ranked 12th, just behind Denmark and Estonia, but thankfully ahead of Bahrain… Our ranking has declined for seven straight years and we need to do something to reverse this trend.
In a Wall Street Journal article, "How Big Government Drives Inequality," David Malpass argues that rising income inequality in America is a result of government over reach and bureaucratic inefficiency. Essentially, the concentration of power creates winners and losers based on influence-peddling, lobbying, and cronyism, and less so on economic benefits to the overall economy. Malpass contends that the middle class bears the brunt of this inefficient redistribution of wealth.
Strong, appropriately-sized government is essential to preserving the freedoms that we have long enjoyed in this country. But an ever-expanding government, intent on controlling more than it should, will have an opposite effect. After seven years of decline in our national ranking of economic freedom, and after five years of the weakest economic recovery in the post war era, that is where we stand as a nation today.
Big dreams for America…
Let's start with term limits for congress. Wouldn't that go a long way toward reducing special interest politics which seems to benefit only the well-connected Washington elites?
Then let's envision meaningful deficit reduction and tax reform. Finally, let's really dream big and work toward shrinking the overall reach of government. As we have seen in the disastrous roll out of the Affordable Care Act, our federal government has gone too far.
Some day in the not too distant future, a leader will emerge that will articulate these very dreams, and like Digger, he will convince his team that they are achievable. America has a knack for producing the right person for the right cause at precisely the right time. Abraham Lincoln during the battle to abolish slavery, and Dwight Eisenhower and Andrew Higgins in World War II, come to mind. This future leader, by spearheading the effort toward accomplishing these dreams related to the right-sizing of government, will undoubtedly garner a prominent place in the history books of tomorrow.
In the meantime, we'll languish economically, and our standing in the world will continue to decline. Indeed, not a pretty picture. But in America, still, one can dream big amid an unpleasant reality. We can, perhaps, practice cutting down the nets.
Michael Kayes, CFA
© Willingdon Wealth Management
