Elon for a Day

I wonder whether Tom Friedman regrets that infamous “China for a day” talk, which, even though it is frequently misrepresented—Friedman generally has been clear about the character of the Beijing regime even as he envies it—expressed in unusually plain terms the naïve autocratic ambition at the heart of so much progressive thinking. 

Right now, even China doesn’t want to be China for a day. 

The COVID-19 crisis presented a useful test case for different kinds of governments and political attitudes—and all of them failed in important ways: Sweden took a libertarian view at the onset of the epidemic but had introduced vaccine passports by the end of 2021; the European Union wasn’t much of a union at all in the early days of the epidemic, with national borders suddenly reappearing and national governments taking the lead in organizing the public-policy response, with the union’s relatively constrained role oriented toward long-term economic recovery; the United States did what the United States now does, which is to turn everything into a proxy culture-war battle; and China, the government of which has developed what is arguably the premier police state in all of human history so far, pursued a hyper-aggressive “zero-COVID” strategy, going as far as to lock residents in their homes to enforce the quarantine. (The Chinese government denies locking its subjects in their homes, but the Chinese government lies about just about everything that Chinese government takes a public position on.) The countries that are usually well-run—Switzerland, Canada, New Zealand—all screwed the COVID pooch in different ways. Nobody got it right. 

The dream of being “China for a day” is the dream of pursuing that which one knows (“knows”) to be intelligent, just, and wise with plenary authority and without opposition. It is the belief that we—we the enlightened—understand what must be done and require only wide latitude in our actions. That attitude is not confined to government life—and neither are its predictably poor and sometimes catastrophic consequences. 

It’s China every day at Twitter now, and Elon Musk is the social-media firm’s corporate Xi Jinping, a gang of one. (Xi, unlike Musk, knows what the outcome of a vote is going to be before he allows one to happen.) The big mess of category errors and ignorance bundled together in the populist demand that we “run this government like a business” ignores how badly businesses often are run. (In fact, the ladies and gentlemen in Washington do try to run the government like a business—unfortunately, that business is Enron.) Businesses, in fact, suffer from many of the same problems as government agencies—especially the problem of misaligned incentives. CEOs and corporate managers do not necessarily have the same financial interests as a firm’s shareholders—ceteris paribus, the shareholders generally would prefer to pay their executives less, while the executives would prefer to be paid more. (Ceteris ain’t never paribus.) Innovations such as paying executives in stock options rather than paying them in cash are intended to bring all parties’ incentives more perfectly into alignment and, to some appreciable extent, that has worked. But there are incentives that are harder to reshape, especially non-financial incentives such as the ones that seem to motivate Musk’s eccentric and chaotic management of Twitter. Of course, Musk would prefer that Twitter make a lot of money—he did not become a billionaire by accident—but, in addition to money, he values other things: attention, the opportunity to engage in adolescent grandstanding, cultural status, etc. It’s a hell of a way to have a midlife crisis, but, when you’re (on some days) the world’s wealthiest man, you can’t just go out and buy a Corvette or leave your wife for some embarrassing obscure starlet. 

People often talk about relying on market-oriented institutions as a matter of incentives: Government workers get paid the same irrespective of how well they actually perform, but if you have a laundromat and all the washing machines are broken, you’re going to go out of business. Incentives matter, of course, but the real secret sauce in free markets isn’t what gets us richer—it’s what gets us smarter. 

Consider two complementary corporate examples. 

Children of the 1980s will remember the trauma of New Coke, a fiasco in which all the smartest people from product development to marketing, all the world’s top soft-drink scholars and sugary-beverage men got it phenomenally wrong and managed to turn the best-known brand on Earth into a product nobody liked. A good point of comparison (and, nutritionally, an equally suspect one) is McDonald’s, a company that tries a lot of new things and has figured out how to achieve something extraordinarily valuable in business: a low cost of failure. McDonald’s rolls out stuff nobody wants on a regular basis. Strange as it may seem, McDonald’s is, in terms of its product development, a lot like a book publisher: Everybody knows that much of the new product it puts out is going to fizzle or fail outright, but everybody also knows that there is no reliable way to predict the hits or cook up a hits-only business model in the office or laboratory, so they end up with a portfolio model: a lot of products that land right at the line of mediocrity, a few big flops, and, one hopes, a couple of big hits that redeem the whole portfolio and pay the bills. Coca-Cola put a lot of eggs in the New Coke basket—there’s a reason the firm has a portfolio of hundreds of brands today. 

That model works great—for the things it works for at all. But it does have some important shortcomings, one of which is that we can’t really use the underlying principles to design a national public-policy response to an epidemic caused by a viral contagion that—let us remember—we knew approximately squat about in the first days of the COVID epidemic. But we make things worse than we have to, as well. Because COVID has been wrapped up in our endlessly idiotic culture war, it often is very difficult for people and institutions to be frank about what they got wrong. This is even worse in the case of people such as Anthony Fauci, who gives the definite impression of a man who has trouble admitting error. 

Elon Musk is not stupid, and neither is Xi Jinping—but each of them shows how easy it is to get things spectacularly and persistently wrong irrespective of whether one is operating in the private or public sector, in the context of a free market or a police state. Democracies are like market-based actors in that they incorporate elements of choice and accountability, but—and let me be clear here that I am not equating even the worst of American government to the Chinese gulag state—our government institutions and agencies can be obnoxious, high-handed, obdurate in their dysfunction, and, though it may pain us to take note of the fact, corrupt. American government is very different from Chinese government, but at times they make similar mistakes and persist in error for similar reasons. What we need isn’t the unilateral power of being “China for a day”—what we need are institutions that can learn because they are blessed with a relatively low cost of failure. 

When it comes to dealing with new, difficult, and complex challenges, we need institutions and attitudes that are based on the assumption that getting things wrong is the first step—or the first 10,000 steps—in getting things right.