It’s Still the Economy—Some Ways to Improve the U.S. Economic Outlook

The 2016 presidential election has certainly been remarkable. The headlines have been dominated with some of the worst mud-slinging, name-calling, and character assassination (and this week an off-the-cuff suggestion of the actual assassination of one’s opponent) in American political history. Adding to that, the two major parties have nominated historically unpopular candidates, and 2016 may be long remembered as a dark chapter in the national annals.

For those citizens interested in public policy as opposed to the latest accusations, scandals, and gaffes, improving the U.S. economy continues to be among the greatest concerns. What ideas and steps can make our commercial sphere grow – and not just for the short term, or with a few “winners” – but instead enlarge the pie for all, with a sustainable framework that can weather economic and political change and upheaval?

Gallup has been polling American attitudes toward various ideas to stimulate the economy put forth by Democrats and Republicans in the 2016 campaign. [1] When asked about the chance of effectiveness of almost 50 different proposals, participants rated “ensuring that women receive equal pay for equal work” as the most popular idea (64% thought it would be “very effective”). Other planks that were rated highly were “improving job training for veterans” and “giving small businesses easier access to loans to start or expand their business.”

by JefParker
The high-tech industry is notable for its ability to produce innovative new ideas and cultivate entrepreneurship. Speaking to a tech audience at Idea Festival 2015, Daniel Altman outlined some of his proposals that could move the economy toward a pattern of steady growth. Altman noted that the bargaining power of employees around America in sectors like manufacturing has been reduced over the past few decades due to the precipitous decline of private-sector unionization, the increase of automation, and lower-cost workers in the developing world with the rise of the global trade.  Altman suggests the creation of a “global intervention bill” that would act as a G.I. Bill for displaced workers. [2] This writer’s father used the G.I. Bill, as did so many others, after returning to the U.S. from Army service in the Korean War. He used it to become the first member of his family to attend college, and then train for a professional career. The investments made in soldiers allowed him to escape a pattern of dead-end poorly-paid blue collar jobs he’d previously had before the war and move from a working-class upbringing to getting a taste of the American Dream. Having the skills to earn a higher salary allowed him and so many other veterans to make stronger contributions to the economy.

In a similar sense, workers who are laid off could be eligible to receive a package of supports that could guarantee job (re)training and the ability to sustain a family until the completion of the program. In areas where the closure or relocation of a firm may throw a number of employees out of work, a G.I. Bill would ameliorate the negative effects of multiple households shrinking from the local economy, and the downward spiral of other businesses and services in the community that may feel the sting from losing the patronage of the displaced workers.

Altman also recommends a focus on wealth as opposed to income when determining taxation. Assessing the full measure of one’s wealth instead of solely income would make taxes more equitable since it would put more focus on those with the ability to pay. If such a system raised revenue some of the monies collected could be utilized toward economic development plans and funds.

Funds that incubate small businesses, entrepreneurship, and cooperatives, and provide them with low-interest loans, are essential to sustaining an economy. Altman says that increased revenues may also be allocated to creating local, regional, or state “sovereign wealth funds.”  Funds like this could help nurture innovative, but potentially risky, ideas that could have long-term potential, but may not receive initial investment.

by Darron Birgenheier
One of Altman’s most interesting (and likely controversial) ideas is for public school enrollment to be done by lottery. If randomization was introduced to determine students’ schools, it would hopefully lead to equitable funding of all schools, as opposed to the current system where more affluent neighborhoods and districts get more, allowing their students more opportunities later in life. In a random system each stakeholder would need to develop a sense of investment in the local system as a whole instead of just their own neighborhood. Such a change may also expose kids (and their parents) to a wider slice of their community, hopefully raising student performance across the board. Raising the performance of our public schools would not only help to create more knowledgeable and skilled members of society, but would also prepare students to attain higher wages and a better quality of life.

Making real investments in the public system of instruction appears to have bang for the buck too. Economists Eric A. Hanushek, Ludger Woessmann, and Jens Ruhose studied the economic effects when states increased spending to improve K-12 education. [3] They focused on qualitative factors like academic attainment and standardized test scores, but also on measuring workers’ total abilities, skills, and performance. Comparing these metrics with data from the National Assessment of Educational Progress, the authors predicted that if there was a push to get all American students to the “basic mastery” level the U.S. could see a GDP rise of $32 billion or nearly 15% higher than currently. [4]  

A more aggressive approach by individual states could, of course, push economic growth higher. There is plenty of room for improvement for increased public investment as state spending on education is only about 4% of total GDP now. The issue, especially for some of the lowest performing states in education, is to make the case that investment now will pay off with greater skill sets for tomorrow’s workers. The states that don’t see the value of investment may see a “brain drain” to rival states.

The Center on Budget and Policy Priorities’ (CBPP) prescription for enhancing the economy at the state level also focuses on targeting investment in education and supporting entrepreneurial start-up programs. They also urge a restoration of the national infrastructure. [5] The most recent “report card” by the American Society of Civil Engineers (ASCE) gave the U.S. a pretty lousy D+ grade (although that was actually higher than the previous report!). [6] Our health, safety, and national security depend on such components as clean water mains, sound bridges, and up-to-date port facilities. Crumbling highways, aging electrical grids, and dated inland waterways also sap the ability of businesses to expand or complete their objectives. Repairing the infrastructure nationally will stimulate the economy initially through construction and allied trades receiving jobs. A well-functioning system will sustain further ongoing economic activity as well as jobs in infrastructure maintenance.

The CBPP also looks towards anti-poverty programs that can supplement the earnings of the working poor. Just over half of the states have their own version of the effective Earned Income Tax Credit. Boosting eligibility for that program, along with other programs that provide bang-for-the-buck like SNAP and Medicaid can keep households out of poverty, and let them take a more active role in the economy knowing they have a secure safety net to sustain them until they can move to higher earnings.

America’s poor are also disproportionately connected to the criminal justice system. For non-violent or dangerous crimes, policy reforms to utilize mediation, sanctions, restorative justice techniques, treatment, education, and social service supports have the potential to keep offenders out of a cycle of incarceration and recidivism, and allow them to make economic contributions to their communities and support their households.

CBPP warns against the tendency of some states to dramatically cut taxes for their citizens or corporations. The problem with these much ballyhooed tax cuts is that they generally benefit only the wealthiest residents and most-profitable companies, and there is scant evidence these giveaways do much to stimulate the economy. Kansas enacted massive tax cuts in 2012 with a resulting deep recession and massive cuts to state services. [7]
  
The U.S. began exports of liquefied natural gas (LNG) earlier this year. The opportunity for the American economy to become a net exporter, rather than importer, of natural gas for the first time since 1957 has important geo-political pluses for the United States. [8] Although the long-term economic benefit of this trade will depend on commodity prices and other factors, infrastructure improvements are critical to the United States taking a world lead in a vital area of global trade. There is major potential for economic development and the creation of jobs as well as energy independence if LNG exports are a success. Policymakers should set aside some percentage of LNG revenues to fund further development of sustainable alternative energy initiatives and infrastructure.

One area of the economy which remains on hold concerns immigration policy. The U.S. issued 85,000 H-1B visas last year for skilled foreigners. That might sound good, except that 233,000 applied. [9] Increasing the allotment of visas should be included in any immigration reform policy. The rationale for this increase is not only the global race to attract talent, but also because immigrants are more likely to start new businesses than native-born Americans. [10]

One hopes that innovative economic ideas that build our national infrastructure, shore up the social safety net, and invest in public services that help the common good can be heard among the ongoing dysfunction of this campaign season.

—Kirk G. Morrison, MLIS

Mr. Morrison is a librarian in Connecticut and interested in issues of social justice and rebuilding social capital and civics in communities nationwide.