The Gift That Keeps on Giving

Posted: Jan 01, 2010 12:01 AM

            So are your children still playing with the toys you gave them for Christmas? Or have they already set them aside and moved on to something newer and better?

No doubt you went to great lengths to pick up the greatest gifts for everyone on your list. Maybe you opted for a nice Care Bear or some Beanie Babies. A Tickle Me Elmo, or a Barney Talking Doll. Or maybe something high-tech, such as a Nintendo GameBoy or a Tamagotchi.

            What do these gifts have in common? Well, each represented the hottest gift on the planet at one time. Parents once lined up to buy these dolls and toys, and children clamored for them on Christmas morn. Yet now, within living memory, they’re museum pieces and the world has moved on to its iPads and eReaders.

            There are several lessons here.

            First, humans tend to want the next great thing. And this is especially true of Americans. Our ancestors pressed relentlessly westward, always believing there was a better life just beyond the horizon. After they finished crossing North America, millions found that better life in California. For most of a century the Golden State was the center of innovation and creativity in America, giving us Hollywood, income tax reform and Ronald Reagan, among other things. The saying, “As goes California, so goes the nation” has long been correct.

            Of course, California spawned many bad ideas, too. The state is today hostage to public sector unions and suffers from crumbling infrastructure and failing schools. As William Voegeli wrote last year in City Journal, Californians are voting with their feet (and moving vans). “Between April 1, 2000, and June 30, 2007, an average of 3,247 more Americans moved out of California than into it every week, according to the Census Bureau,” Voegeli wrote.

Expect the human exodus to continue, now that the Golden State has lived up to its “left coast” reputation. “California bucked the national trend and elected Democrats to all eight of its statewide offices” The Economist reported last month. “The legislature remains solidly Democratic. Even the new governor who takes office next month is in fact an old one: Jerry Brown last had the job in 1975-83.”

A second lesson is that a free market will keep coming up with that next great thing, while a government-planned economy will keep lagging behind.

Columnist Bret Stephens made this point in the Wall Street Journal on December 21. “Americans understand that innovation is inherently serendipitous. That was true of Facebook, just as it was true of Apple, Google and Microsoft. These four companies have a combined market valuation that approaches $700 billion. That alone is 12 percent of Chinese GDP.”

Stephens predicts that China’s command-and-control economy, which doesn’t respect property rights and encourages conformity instead of originality, will continue to lag far behind the U.S., making the next 100 years a second “American century.”

Of course, there’s always the risk that Americans will stifle our creativity with federal over-regulation. After all, government is not only inefficient, it also tends to lock in the old things and self-perpetuate. The Federal Communications Commission, for example, was formed as the Federal Radio Commission to regulate AM broadcasting. Now it’s eager to put controls on the Internet by imposing “net neutrality,” to supposedly protect consumers from unscrupulous service providers.

But as FCC commissioner Robert McDowell wrote in the Wall Street Journal, “The Internet has been open and freedom-enhancing since it was spun off from a government research project in the early 1990s. Its nature as a diffuse and dynamic global network of networks defies top-down authority. Ample laws to protect consumers already exist.”

As another example, the Federal Trade Commission wants to mandate that internet browsers include a “Do Not Track” feature to protect consumers. But there’s no need for such a mandate, as Microsoft already plans to add a similar feature to its newest browser. The market runs ahead of regulators every time.

Even before he ran for office, Ronald Reagan noted that the closest thing to life on Earth is a government bureaucracy. As 2010 winds down, we can only hope that some of our toys have a longer shelf life than some of our regulations, as we all strive to move on to the next big thing.