American Gridlock: Why the Right and Left Are Both Wrong - Commonsense 101 Solutions to the Economic Crises
Pessimism is ubiquitous throughout the Western World as the pressing issues of massive debt, high unemployment, and anemic economic growth divide the populace into warring political camps. Right-and Left-wing ideologues talk past each other, with neither side admitting the other has any good ideas. In American Gridlock, leading economist and political theorist H. Woody Brock bridges the Left/Right divide, illuminating a clear path out of our economic quagmire.
Arguing from first principles and with rigorous logic, Brock demonstrates that the choice before us is not between free market capitalism and a government-driven economy. Rather, the solution to our problems will require enactment of constructive policies that allow "true" capitalism to flourish even as they incorporate social policies that help those who truly need it.
Brock demonstrates how deductive logic (as opposed to ideologically driven data analysis) can transform the way we think about these problems and lead us to new and different solutions that cross the ideological divide. Drawing on new theories such as game theory and the economics of uncertainty that are based upon deductive logic, Brock reveals fresh ideas for tackling issues central to the 2012 U.S, Presidential election and to the nation’s long-run future:
Demonstrating that the concept of a government “deficit” is highly problematic since it blinds us to the distinction between a good deficit and a bad deficit – where a deficit is good if it results from borrowing dedicated to productive investment rather than to unproductive spending.
Deriving the need for a U.S. Marshall Plan dedicated to very high levels of profitable infrastructure spending as the solution to today’s Lost Decade of high unemployment
Drawing upon a logical extension of the Law of Supply and Demand to demonstrate how the health-care spending crisis can be completely resolved by letting supply increase at a faster rate than demand
Utilizing the theory of bargaining inaugurated by the “Beautiful Mind” mathematician John F. Nash, Jr., to help us avoid being repeatedly duped in our negotiations with China
Making use of a completely new theory of market risk recently developed at Stanford University to demonstrate why dramatically limiting leverage is the key reform to preventing future Perfect Storms, whereas hoping to banish “greed” amounts to whistling Dixie
- Deducting from first principles a solution to the contentious issue of fair shares of the economic pie, a solution that integrates the two fundamental norms of “to each according to his contribution” and “to each according to his need.”
Profound, timely and important, American Gridlock cuts through the stale biases of the Right and Left, advances new ways of thinking, and provides creative solutions to the problems that threaten American society.
Chapter 1 Dialogue of the Deaf 1
What to Do About It
What Went Wrong: Origins of the Dialogue of the Deaf
The Role of Deductive versus Inductive Logic in Policy Analysis
The Illogic of Policy Analysis Today
What Must Be Done to Raise the Level of Debate
Chapter 2 Must There Be a Lost Decade? 23
A Socratic Dialogue with the President Explains Why Not
Reasons for Lackluster Growth During the Remainder of this Decade
"Good" versus "Bad" Deficits, and the Main Policy Proposal
The Identifi cation and Ranking of Public Investment Projects by Their Return
When Huge Defi cits Are Justifi ed: A Unifi cation of the Arrow-Kurz and Keynesian Theories
Chapter 3 Resolving the Entitlements Spending Crisis 75
How to Drive Health-Care Spending Down while Increasing Access
A Supply-Side Solution to the Health-Care Crisis
Three Basic Assumptions for an Optimal Health-Care System
Expert Systems and Automation
Redressing the Social Security Deficit
Chapter 4 Preventing Perfect Financial Storms 119
When Everyone Was Too Clever by Half
The Four Origins of Today's Financial Crisis
The Role of Bad Economic Theory
Emergence of a Pathological Incentive Structure
Requisite Policy Reforms
Chapter 5 Bargaining Theory 101 157
How Not to Deal with China
The Origins of Economics Imperialism
The Possibility of the Hegemony of Political Science: The Nash-Harsanyi Pluralistic Bargaining Model
How Not to Negotiate with Thugocracies—The Case Study of China
The Remarkable Power of the Bargaining Model in Political Science and Beyond
Chapter 6 Beyond Democratic Capitalism 199
An Idealized Political Economy, with Distributive Justice
True Textbook Capitalism, and the Correct Role of Government
Beyond Effi ciency: The Eight Ideals of an Optimal Social System
A Comprehensive Theory of Distributive Justice
Appendix A Supply/Demand Summary of the Patient Protection and Affordable Care Act 235
Appendix B Dynamics of Total Health-Care Expenditure 241
—Dr. Nouriel Roubini, Chairman and Co-Founder, Roubini Global Economics
"Woody Brock is a brilliant economic thinker and we should heed
his call for an Infrastructure Marshall Plan to lift our national
economy. This book should be required reading for everyone who
cares about America's future, particularly our elected
—Ambassador Felix G. Rohatyn , Lazard Frères & Co. LLC
"Woody Brock's new book, American Gridlock is going to
force everybody to think through their views on the critical issues
of public policy facing America today. It is not just a question of
a failure of leadership. It is also a question, as he puts it, of a
failure of thought and analysis. He focuses on this in order to
overcome what he terms "the Dialogue of the Deaf;" the shouting
match between the Left and the Right and its inevitable
manifestation as gridlock. Agree or not, this is the kind of book
to which everybody should pay attention."
—Mortimer Zuckerman, Editor-in-Chief of U.S. News & World Report
"Woody Brock is one of America's best kept secrets. My firm has
had the good fortune of benefiting from his in depth analysis of
future political and economic trends for years.
American Gridlock allows the reader to do the same."
—Stan Druckenmiller, Chairman and CEO; Duquesne Family Office
"Woody Brock is one of the most unreasonable men I know: because
I agree with George Bernard Shaw that the reasonable man adapts
himself to the world, whilst the unreasonable man persists in
adapting the world to himself, and therefore, all progress depends
on the unreasonable man."
—Sir David Tang, Founder Shanghai Tang; Author, An Apple a Week
"Woody Brock's writings are often the fi rst place I encounter
issues that soon become central debates within public policy. He is
prescient, penetrating, broad, surprising and wise. Some writers
illuminate yesterday’s news, a few may shed light on
tomorrows. But very few thinkers can help you to understand the
issues that will shape not only next year, but also the next
decade. As America faces a pivotal election, his book could not be
—Edward Smith, The Times (London)
"The events of the past several years have clearly exposed the
faults in standard economic and financial analysis. And the
economics profession currently seems at a loss to provide credible
and practical policy prescriptions for the current malaise facing
theU.S. and other major countries. In this fascinating book, Woody
Brock stands above the crowd with his original and well thought out
plans for a sensible way forward to a brighter future. It is a
welcome counter to the widespread gloom that surrounds most of the
discussion of the outlook."
—Martin Barnes, Chief Economist, BCA Research
"The world is bogged down by incremental thinking and yearns for
some “big ideas” to liberate us from the serial crises
that confront us. Over the years "Woody" Brock has proven himself
as an original thinker whose solutions to problems often turn out
to be right. Now, in this book, we have a set of recommendations
that may put us on the right course."
—Byron R. Wien, Vice Chairman, Blackstone Advisory Partners LP
"Woody Brock tackles America's big problems at a breathtaking
scale. No small ideas here. And no fl inching from the conclusions
which follow from the fi erce logic he applies. Read this book to
fi nd a way forward out of the broken politics and doctrinaire
policies that leave so many disgusted and depressed to the prospect
of a genuine prosperity."
—Joseph Dear, Chief Investment Offi cer, California Public Employees Retirement System (CalPERS)
"Woody thoughtfully addresses the critical issues facing our
country and shows how they can be resolved using a different
analytical approach. A must read for any serious market
—Susan E. Manske, Vice President and Chief Investment Officer, The John D. and Catherine T. MacArthur Foundation
"Woody Brock is an American masterpiece. There is no one like
Woody. No one is able to think as broadly as Woody, while
simultaneously thinking so deeply. No one is as amusingly
insightful, witty and provocative as Woody. Woody’s economics
are a blend of deep, revolutionary, insight and common sense. I
will never know how he does it, but I deeply appreciate that he
does it. No one is a better catalyst for my own thinking than
Woody. Read American Gridlock. Savor American Gridlock. Allow
yourself to be provoked and prodded by American Gridlock. Then put
it down, go fi shing, then reread a month later. You will be deeply
and lastingly rewarded for your efforts."
—Richard N. Foster, Investment & Advisory Services, LLC; former Managing Director, McKinsey & Company; author of Creative Destruction
"For decades Woody Brock has enlightened a select audience with
his logically rigorous, factually impeccable analyses of past
developments and future trends. Time and again I have seen his
insights prove true, especially in cases where he has challenged
the prevailing wisdom of the era. Now for the fi rst time he
addresses a general readership, with a comprehensive assessment of
how to cope with the most intractable public problems of our time.
I don’t agree with every one of his prescriptions, which is
why I am all the more sincere in recommending the thoroughness and
rigor of his logic."
—James Fallows, The Atlantic
"American Gridlock is a major endeavour containing deeply
profound insights. It requires the courage to see that economics
has largely failed and must be replaced as the master discipline by
political theory and science, and with a new emphasis on fairness
and justice in the distribution of benefi ts and rewards. Woody
Brock is one of the few thinkers of our times who can tackle this
mountainous task and unlock the paralysis in which the increasingly
muddled debate about Capitalism has plunged us."
—Lord Howell of Guildford, Minister of State, Foreign and Commonwealth Office, UK
"If Woody Brock did not exist, God would have had to invent him.
He is a unique, challenging thinker who makes most conventional
economic forecasters look like trend followers. Serious investors
and students of public policy should be delighted that he has
finally written a book in which his renowned analytical approach
focuses on public policy. This is badly-needed fresh air in a
seriously polluted environment."
—Don Coxe, Chairman, Coxe Advisors LLP
"American Gridlock provides a compelling framework for citizens,
policymakers and market participants to overhaul their views on
many important issues of the day. The power of Woody Brock’s
approach—emphasizing deductive reasoning and eschewing
information overload—makes this elegantly written book a must
read for those who value understanding over data. I would suggest
burying oneself in American Gridlock before occupying Wall Street,
the executive suite or public offi ce."
—Scott Bessent, Chief Investment Officer, Soros Fund Management
"H. Woody Brock is one of the few leading economists who can
combine high-powered theory and deductive logic to yield practical
solutions to real-world issues. He constantly surprises and
inspires with new creative inputs and insights. In his latest book,
he provides thought-provoking ideas on how to get a polarized and
gridlocked America on the path to progress."
—Christian Casal, Offi ce Manager McKinsey & Company, Switzerland
"If you can handle the truth about America’s Lost Decade,
Phiberalism, Leverage, Thugocracies, and Distributive Justice then
American Gridlock is a must read. You will leave behind
today’s heads I win, tails you lose mentality. No more
repetitive talking heads, know it all politicians and tired
academics. Woody offers up common sense solutions based on sound
reasoning to today’s pressing problems. Finally, the
—John H. Carlson, Fidelity Investments, Boston
"American Gridlock delivers desperately needed fresh
air and sunlight, dispelling the funk and gloom that are dampening
the American spirit. Woody Brock defi nes five critical problems
confronting the US today and leads the reader to compelling win-win
policies that will break the current gridlock and put America on a
path to sustainable prosperity. His work is original and of
critical importance. The clear thinking and optimism of one of the
world’s great thinkers obviates the need to contemplate
writing America's obituary. Anyone with a vested interest in our
future should place American Gridlock at the top of his reading
—Jan L. Yeomans, Vice President and Treasurer, 3M
"Woody is a paragon for prosperity, and he is a master of truth
and its processes—something our postmodern age has let drift
out of the public discourse. He must be read by politicians,
policymakers, CEOs and advisers, and by everyone concerned with
today’s problems and building a sustainable and prosperous
future. He shows how it can be done without unnecessary pain,
making this book the antidote to the current global economic and fi
nancial malaise. His new book is a must read for every politician,
policymaker, adviser, CEO, and everyone concerned with
today’s problems and building a sustainable future."
—Michael Roux, Chairman, Australian Davos (ADC) Forum
"If ever there was a time when a fresh, original approach to
understanding the challenges facing democratic capitalism was
needed, it is surely now. This book offers such an approach, and
provides novel answers to wickedly difficult questions about
the sustainability of our way of life in the 21st Century. I have
admired Woody Brock’s creative strategies to address complex
issues for decades, and rank this book as his greatest, and most
important effort yet."
—Keith Ambachtsheer, Director, Rotman International Centre for Pension Management, Rotman School of Management, University of Toronto
"American Gridlock surpasses the lofty expectations of a
long-standing client. To provide "win-win" solutions to our most
vexing economic problems, Woody employs commonsense coupled with
profound and not often cited academic principles. His analysis
addresses the challenges—defi cits, entitlements, fi nancial
meltdowns, dealing with China, and Distributive Justice—that
must be confronted to arrest the decline of the West. Most
impressively, his is a refreshingly independent and optimistic
voice in an era of partisanship and pessimism."
—Ed Sullivan, Ph.D., CFA, Managing Director, General Motors Asset Management
"American Gridlock, the new book by Woody Brock, should
be required reading in Washington. First, because it is offers real
solutions to many of today's biggest problems that are based on
solid grounding in economic and political theory. Secondly, because
it offers real hope that there is a way out if only folks will
start to think differently and creatively."
—Will McLean, Vice President and Chief Investment Officer, Northwestern University
"I have known Woody for many years and have always admired his
brilliance on economic issues. He has advised many of us on looming
economic disasters including his prediction of the crash in 2008.
Not surprisingly, in American Gridlock: Why the Left and
Right are Both Wrong, Woody, like only he can do, diagnoses the
persistent problems in today’s economy then sets his sights
on prescriptions for fi xing them—prescriptions that others
are unable or unwilling to see. This stunning work is wholly
different than anything that has come before it, with invaluable
insights for policymakers, businessmen, and everyday citizens
alike. This book is a must read for anyone who longs for Washington
D.C. to stop the shouting and start addressing our nation’s
problems in a real and meaningful way."
—J. Pepe Fanjul, Vice Chairman, President, and Chief Operating Offi cer of Fanjul Corp., and Florida Crystals Corp.
"American Gridlock provides the first optimistic
analysis suggesting how the United States can recover its
leadership position and solve its strategic fi nancial dilemmas.
The U.S. has lost its moral and political compass. Woody Brock
suggests it can be regained by using an approach to the issues
based on reasoning from fi rst principles, clear definition and
consistent logic. Everyone interested in the future of American
leadership must read and study this book. It is hard work but worth
—Sir Roderick Carnegie AC, Chairman, Pacifi c Edge Group
"Across the years, the noted decision theorist Dr. H. Woody
Brock has advised a global clientele of public and private sector
leaders faced with crucial challenges. Thanks to this deeply
intelligent, clearly written, and heartfelt book, the
commonsensical wisdom of a legendary advisor to investors,
corporations, republics, kingdoms, foundations, and NGOs, now comes
home to the USA, where it is sorely needed."
—Kevin Starr, University Professor and Professor of History, University of Southern California. author of Americans and the California Dream, 1850–1915
"Woody's writings including his new book, American
Gridlock, should be required reading for all current and
aspiring members of Congress and the White House. He always
provides well founded and insightful commentary that identifi es
and explains complex developments in economics and fi nance and
provides practical solutions to the enormous challenges facing the
United States and the world economy."
—Dennis Schwartz, Vice President, Pension Fund & Investments, Deere and Company
"Woody Brock presents a powerful and provocative explanation of
a public choice system that has lost its way. Through compelling
logic and lucid narrative, he offers a bold solution to the current
crisis and paints a picture of an economic future that can be
salvaged. This book is compulsory reading for anyone with a serious
interest in public policy."
—Peter Crone, Chief Economist, Business Council of Australia and former Senior Economic Adviser to the Prime Minister of Australia, the Honourable John Howard
"Woody Brock is a master at explaining complex, highly
mathematical and often overlooked economic theories in terms any
investor can understand. In American Gridlock, he uses
new and sophisticated economic theory to derive win-win solutions
to five of America's most pressing problems. His focus on deductive
logic provides clarity of thought that should serve as a standard
for economic and fi nancial writers everywhere."
—Chris Doheny, Associate Director of Asset Allocation and Risk, The Ford Foundation
Why the Right and Left Are Both Wrong
Commonsense 101 Solutions to the Economic Crises
By Horace “Woody” Brock, Ph.D.
Pessimism is ubiquitous throughout the Western world as the pressing issues of massive debt, high unemployment, and anemic economic growth divide the populace into warring political camps. Right and Left-wing ideologues talk past each other, with neither side admitting the other has any good ideas. In American Gridlock (Wiley; January 2012), leading economist and political theorist H. Woody Brock bridges the Left/Right divide, illuminating a clear path out of our economic quagmire.
American Gridlock is the first book to identify and interrelate five of the principal themes of the 2012 U.S. presidential election:
- Distributive Justice (who owes what to whom and why)
- Today’s “Lost Decade” and how to salvage the economy from stagnation and unemployment
- Exploding “entitlements” spending
- Chinese economic and military aggression
- Future financial market Perfect Storms
- The relationship of “capitalism” to a truly idealized social system
In addition, it is the first book to demonstrate how today’s “Dialogue of the Deaf” between the Left and Right wing has generated full-stop policy gridlock in Washington—and how to put an end to today’s Left/Right shouting match.
“By deducing my policy solutions to the nation’s problems from first principles that are appealing to anyone, I present recommendations that are neither Left nor Right Wing. I propose them as a way to bust up American Gridlock,” Dr. Brock said.
About the Author:
Dr. Horace “Woody” Brock, one of the world’s foremost economists, is the author of the new book, American Gridlock – Why the Right and Left Are Both Wrong, Commonsense 101 Solutions to the Economic Crises. More than 50 leading chief executives, academics, journalists and investors endorsed the book, published in January 2012 by John Wiley & Sons, Inc. As the founder and president of Strategic Economic Decisions, a renowned economic think tank, Dr. Brock has spent more than 25 years counseling global corporations and other institutions who benefit from his in-depth analysis of ongoing structural changes in the global economy.
Dr. Brock earned his B.A., M.B.A. and M.S. from Harvard University, and his M.A. and Ph.D. from Princeton University (mathematical economics and political philosophy). He studied under Kenneth J. Arrow, Stanford University, and the late John C. Harsanyi, University of California, Berkeley, both winners of the Nobel Prize in Economics.
Why the Right and Left Are Both Wrong
Commonsense 101 Solutions to the Economic Crises
By Horace “Woody” Brock, Ph.D.
Wiley; January 2012
Available in Hardcover and e-Book formats
Praise for American Gridlock:
“With rigorous logic, American Gridlock identifies five major problems confronting the nation. These range from salvaging today's 'Lost Decade,' to the unequal distribution of wealth, to preventing bankruptcy from 'entitlements spending,' and to preventing future financial market crises. Woody Brock does not simply offer his opinions about these crises. Rather, he deduces win-win solutions to each of these from first principles. It is high time for such a book, especially during a presidential election year."
—Dr. Nouriel Roubini, Chairman and cofounder, Roubini Global Economics
"Woody Brock is a brilliant economic thinker, and we should heed his call for an infrastructure Marshall Plan to lift our national economy. This book should be required reading for everyone who cares about America's future, particularly our elected officials."
—Ambassador Felix G. Rohatyn, Lazard Frères & Co. LLC
“For decades Woody Brock has enlightened a select audience with his logically rigorous, factually impeccable analyses of past developments and future trends. Time and again I have seen his insights prove true, especially in cases where he has challenged the prevailing wisdom of the era. Now for the first time he addresses a general readership, with a comprehensive assessment of how to cope with the most intractable public problems of our time. I don’t agree with every one of his prescriptions, which is why I am all the more sincere in recommending the thoroughness and rigor of his logic.”—James Fallows, The Atlantic
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