Policies that starve public education hurt economic growth
Since the time of Abraham Lincoln, the first Republican president, a key GOP policy and strategy has been that nothing is more important to economic prosperity than capital. If you're working with your bare hands, you do well to create more than a few dollars of value a day. If you have capital equipment like a vehicle, a lathe, a computer or factory, you can potentially create thousands, or millions of dollars in value each day.
The GOP believes they need to encourage more investment by corporations by taxing them less: the more money invested in capital assets, American workers will be more productive. The GOP is still thinking as they did in the time of Lincoln: More capital from more investments will make us more prosperous.
Is capital essential to our economy? Of course, but so is agriculture. There is a difference, though, between knowing that we'd perish without farmers, and expecting agriculture to employ a growing number of people. In 1800, about 90 percent of Americans worked in agriculture; by 2017, about 2 percent do. Agriculture is essential, but it's certainly not a jobs and wealth growth industry. Same for manufacturing. Like farming, jobs in manufacturing have been in steady decline as a percentage of the workforce since about 1940.
Banks are professionals at understanding credit risk and knowing when to loan money for a kitchen remodel or a business expansion. Bankers — like business executives, teachers, police and engineers — make mistakes, but deciding where capital should be employed to maximize the returns on capital is their forte. If they have a billion dollars, they look for ways to invest or loan that out in order to create a return. Only as a last resort will they leave it idle and not making money. Bankers are currently letting trillions sit idle because they don't see profitable ways to employ this capital. They don't see capital as scarce, as U.S. banks have $2.2 trillion in reserves, the S&P 500 has $2 trillion in cash (even while spending half a trillion a year on stock buybacks), and there is more than $12 trillion in negative interest rate bonds around the world.
Capital was scarce 150 years ago during Lincoln's presidency. Then, nearly any policy that encouraged the growth of capital was likely to have a positive effect on the economy, helping to make us all more prosperous.
Capital is now in great abundance, but policies that starve public education and research to send back more capital to corporations and individuals will only hurt economic growth, not help it. There is no way that someone can look at the evidence and conclude that what our economy lacks now is capital. There is no way, of course, unless you fail to update what was once a great perspective, to adjust to a new landscape. The party of Lincoln has given way to the party of Donald Trump. Mindful intelligence that carefully considers new facts has given way to mindless ideology that ignores them.
Allen Warren is a Forest Grove resident.
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