Free The Next Decade by George Friedman

structure of “big government” left behind by Roosevelt. Reagan shifted the balance between the state and the market back the other way, weakening the state to strengthen the market.
    Part of rebuilding confidence has to do with understanding which part of the elite—political, corporate, financial, media—is to be held responsible for the crisis. By essentially putting one set of elites or another into receivership, transferring their authority in many ways to other elites, Reagan and Roosevelt gave the public the sense that the president was acting decisively and taking power away from those who had failed. This eased the sense that everyone was helpless, and indeed cleared the way for at least some reforms that didn’t hurt, might have helped, and certainly were needed symbolically. In the end, the crises worked out both because of the underlying power of the United States and because of the resilience of the modern state and corporation, which cannot live apart, yet have trouble living together.
    Neither Bush nor Obama was able to manage the national psyche as Roosevelt and Reagan had. Bush lost control of the war and was blindsided by the financial crisis. He fell behind the curve after Iraq and never caught up. Obama created expectations he could not fulfill, then failed to create the illusion that he was fulfilling them. But of course Reagan ran into similar problems at first. The issue that is unknown but that will affect the next decade deeply is whether Obama can recover and lead. Can he understand that when Roosevelt spoke about fearing fear, he meant that the president’s job is to appear to be effective whether or not he is? If Obama doesn’t learn that, the nation will survive. Presidents come and go, but this is a fragile time, with the legitimacy of the presidency and the country itself caught between the demands of republic and empire.
    When we talk about shifting the boundaries between corporate and political elites and between the state and the market, this inevitably raises ideological issues. For the left, strengthening the corporate elite and the market threatens democracy and equality. For the right, strengthening the political elite and the state threatens individual freedom and property rights. It is an interesting debate to watch, save that the problem is not moral or philosophical but simply practical. The great distinction that prompts such heated ideological debate just isn’t there.
    The modern free market is an invention of the state, and its rules are not naturally ordained but simply the outcome of political arrangements. The reason I say this is that the practical foundation of the modern economy is the corporation, and the corporation is a contrivance made possible by the modern state. The corporation is an extraordinary invention. It creates an entity that the law says is liable for the debts of a business. The individuals who own the business, whether a sole proprietorship or a huge publicly held entity, are not held liable for those debts personally. Their exposure can be no greater than their initial investment. In this way, the law and the state shift the risk from the debtors to the creditors. If the business fails, the creditors are left holding the bag. Nothing like this existed before the birth of “chartered companies” in the seventeenth century. Before that time, if you owned a business, you were liable for all of it. Without this innovation, there would be no stock market as we know it, no investment in start-ups, little entrepreneurship.
    But this apportionment of risk is a political decision. There is nothing natural in the idea that the boundaries of individual risk are drawn where they are. Indeed, over time, these boundaries shift. The corporation exists only because the law created it. The political decision to create corporations also means that corporate law, not the law of nature, defines the precise boundaries of risk and liability. There may theoretically be