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Tuesday, December 11, 2012

What is Growth?

Yesterday I attended the Atlantic American Works Summit. Some smart and very respected people discussed the American economy, taxation policy, the debt and how to fix it: Alice Rivlin, Peter Peterson, Robert Hormats and many other experts in business, competitiveness, and innovation guided by the Atlantic's James Fallows and Steve Clemons.

Some common themes:

  • The partisan stalemate is terrible for business and the economy much more so than any particular policy or ideology.  Moreover the partisans are distracting attention from real issues.
  • The regulatory framework and process is antiquated and needs total revision for the fast moving global economy.  Right now it is impeding innovation and growth.
  • Long term debt will bring America down and curbing entitlements, especially related to health care, and tax reform are essential to deal with it.
  • Corporate tax rates should be lowered (even though effective corporate taxation is not much higher than the G7 countries) in order to be more inviting to companies to come and stay.
  • Returning tax rates to Clinton era rates or even higher won't make much difference to business decision making but will provide needed revenue to deal with the long term debt.
  • The most important investment need is in education, especially advanced education for the new higher level jobs; this includes investment in Research and Development.
  • Public investment in developing and maintaining infrastructure is both job producing and supports business and commerce.  We can do more smart spending to stimulate the economy at the same time we set a framework for reducing the long term debt.  
I saw no evidence of disagreement. This was indeed the sensible establishment singing in chorus on how to save the American and perhaps global economy. All were balanced in respect the public and private sectors. All saw the role of government investment and taxation policies, as well as defense to secure global commerce, in promoting a strong economy.

There was some talk of climate change and carbon taxes, alternative energy and energy independence, reduction of health care costs by seeing the major drivers (fee for service, end of life interventions, lack of budget, defensive medicine), but no real engagement in these issues. There was also talk about "all playing by the same rules," especially in relation to living wages and environmental production, but how these rules might come to be and what they are based on was not discussed.

There was universal talk of growing the economy and growing jobs. But there was no questioning of the meaning and measure of growth. This was simply assumed. There was universal talk of investment in education and growing the jobs we need, but the jobs we need were simply assumed to be those that would fill rennewing and new businesses, especially those in or using high tech.

And there's the rub!

It was clear to me that GDP is the standard and that financial resources or money is the measure of growth; and that any production that increased these financial resources was good no matter what its effects on human nature or the environment. Well, that's too strong. These folks do care about human being and the environment. But they assumed that people would decide in a free market, encouraged but not limited by the public working through their governments, by their choices and habits of consumption as to what is good for them. Or do they? The question never came up.

And that is my problem with the discussion of the new global information driven economy. There is little discussion of the values and principles which drive it except those that are given by some doctrinaire religion or ideology or simply assumed as conventional wisdom. It is at this level that we need an educated discussion--one that uses but goes beyond math and science, business and politics, law and accounting. Yesterday the experts said that it was important for the public to be informed. But there was no discussion of popular education processes by which citizens could discuss and act on the what they want beyond more money.

How about investment in this kind of education? That would be growth!

1 comment:

spence Limbocker said...

I attended the same discussion and generally agree with Rollie. One interesting idea was raised that I thought had merit. Development of infrastructure bonds, similar to War Bonds, to pay for infrastructure investments. Another thing that was clear is that in the "Race to the Bottom" we lost.