Impossible - Growth without Investing in Us

I’ve been less than subtle over the years that the United States is living off the investments from past generations. The hydroelectric revolution of FDR’s New Deal, the GI Bill that sent millions of post-WWII veterans to college, the federal Interstate Highway system under President Dwight Eisenhower, the engineering generated by NASA during the Kennedy/Johnson years, etc.

Carter wasn’t around long enough to make a difference. Reagan was about cutting federal expenses, and Clinton was all about cutting the deficit with a budget surplus. George W Bush began cutting taxes and fighting two wars in the Middle East/Central Asia, running the deficit and triggering the worst economic downturn since the Great Depression, while Obama was spending money to recover from that recession, still fighting those wars. And then there’s Donald Trump who massively cut taxes for the rich while not spending as pledged on infrastructure and cutting back on federal support for research and education.

Meanwhile, China and lots of European countries have prioritized government support of research, infrastructure and, most of all, education. They’ve thrown massive billions to improve primary and secondary education and blasted forward in post-high education with a heavy STEM (science, technology, engineering and math) emphasis and free or near-free tuition. Nations that have invested in education see startling results within a decade or two. Economic growth accelerates when the workforce kicks up its skills and learning.

In terms of primary and secondary schools, most countries have one massive school district, or sometimes there are large regional districts (for huge cities, for example), The United States has around 13 thousand school districts. Waste personified. Education curricula are often based on local beliefs not economic priorities.

Otherwise, stagnation defines those who sit with hope that the economy will resurrect their now-obsolete skills… as Donald Trump has promised workers in the Rust Belt and in Coal Country. 70% of this nation’s workforce, those able to hold on to their jobs, haven’t seen an increase in inflation-corrected earning power in four decades. As you look at those rosy unemployment numbers, remember that those who have been displaced and are no longer looking for work are not included in those statistics. That wages have increased for the most skilled incredibly pulls up averages where once-skilled blue collar workers who work at all are now working part-time, in the gig economy, or have taken relatively lower paying work.

Over the last decade, on the other hand, the post-card anti-Trump resistant state, California,  has risen from being the sixth largest economy on earth (if California were a country) to fifth. In the mid-term elections, no Republican won any statewide offices, the legendary GOP stronghold Orange County flipped blue, and the state legislature was voted into a veto-proof Democratic super-majority. California is exceptionally proud of its University of California system but is ashamed at its overall public school system.

California, which is taxed more under Trump’s “tax cut” because of the very limited deductibility of state taxes, is liberal… and hence very, very pro-education, research and infrastructure. But although we pay more income and property taxes than most states, Californians truly understand that they do not grow and prosper without serious upgrades to their entire educational system. They believe that prioritizing quality, increasing access to state residents (versus selling expensive spots to foreign students who do not get residential discounts) and decreasing costs for students are vital for the state’s future… and are ready to increase taxes further to pay for that growth. Fixing the state’s educational system was a basic plank in Governor-elect Gavin Newsom’s platform.

“Most Californians believe higher education should be a top priority for the new governor and support increased funding for public colleges and universities, according to a new survey by the Public Policy Institute of California.

“As the state’s public higher education system struggles to recover from major funding cuts a decade ago, the majority of Californians surveyed by the institute supported giving the schools a wide range of help. Most backed free community college, a statewide bond measure for university construction projects, a minimum state funding guarantee and even reform of Proposition 13 to raise more money by loosening restrictions on taxing commercial properties…

“Democrats and independents were far more likely to favor more generous funding. More than three-fourths of Democrats surveyed said they would support a state bond measure and Proposition 13 reforms to raise more money for colleges and universities, compared with just over a quarter of Republicans.

“Although two-thirds of Democrats and independents want to tie increased funding to student outcomes, such as graduation rates, only 44% of Republicans were in favor. Republicans also were less likely to believe that college was necessary for career success.

“The biggest problem facing college students today, most of those surveyed said — above educational quality and admissions access — is the cost.

“Most were concerned that students were taking on too much debt, and more than one-third of those surveyed said housing and living expenses were a greater financial burden than tuition. (Financial aid covers tuition for the majority of students at the University of California and California State University.)

“The findings are based on a survey of 1,703 California adults, conducted in English and Spanish from Oct. 27 to Nov. 5. The margin of error is 3.5 percentage points.”

“The UC and Cal State systems both are requesting more state funding for 2019-20 to avoid tuition hikes and expand enrollment, provide more student support, pay for faculty and staff raises and repair aging buildings. Despite recent funding increases, the state’s share of per-student support at UC has dropped from 78% in 1990 to 37% in 2017.” Los Angeles Times, November 19^th.

Think the entire United States might be wise to stop wasting money on tax cuts for those who do not need it and instead invest in our future? Given the failure of new investments from that tax cut, the stock buy-backs and dividends that do nothing to improve our economy, it’s time for us to reverse that wrong-headed waste.

I’m Peter Dekom, and if we belief in America, the least we can do is to get government to invest in its future.