David Brooks, "The Two Economies": Symbiosis or Parasitism?

In his New York Times op-ed entitled "The Two Economies" (http://www.nytimes.com/2012/04/10/opinion/brooks-the-two-economies.html?_r=1&ref=opinion#), David Brooks describes an article by Tyler Cowen in The American Interest called “What Export-Oriented America Means” (http://www.the-american-interest.com/article.cfm?piece=1227), which suggests to Brooks the existence of two separate, co-existing economies in the US:

"His work leaves the impression that there are two interrelated American economies. On the one hand, there is the globalized tradable sector — companies that have to compete with everybody everywhere. These companies, with the sword of foreign competition hanging over them, have become relentlessly dynamic and very (sometimes brutally) efficient.

On the other hand, there is a large sector of the economy that does not face this global competition — health care, education and government. Leaders in this economy try to improve productivity and use new technologies, but they are not compelled by do-or-die pressure, and their pace of change is slower."

Brooks then contrasts the attitudes of Republicans and Democrats to these two economies:

"Republicans believe the globalized sector is racing far out in front of government, adapting in ways inevitable and proper. If given enough freedom, Economy I entrepreneurs will create the future jobs we need. Government should prepare people to enter that sector but get out of its way as much as possible.

Democrats are more optimistic that government can enhance the productivity of the global sectors of the economy while redirecting their benefits. They want to use Economy I to subsidize Economy II."

I would take this a step further. There is a need for Economy I to subsidize Economy II; however, Economy II has demonstrated itself to be wasteful, misdirected and prone to fraud. Indeed, Medicare, plagued by $60 billion of fraudulent charges each year, needs to be overhauled, and a much-maligned Paul Ryan has some of the answers. Another example? Government funded research is inordinately slow and not consumed with or even directed at achieving tangible commercial results. I believe that legislators must be vigilant not to allow a symbiotic relationship between the two economies to develop into parasitism.

In short, there will always be a tension between Brooks' Economy I and Economy II, but it is necessary to acknowledge the shortfalls of Economy II and make certain it does not consume Economy I.