This Guest Post prompted by media pieces is chiefly comments on them by friends. I’m posting it because it is so relevant to my post earlier today about our federal jobs program.
LarryN started the discussion by posting this is important, an article about the correlation between income and life expectancy. Nationwide, men in the upper income half who reach 65 live six years longer than in the late 1970s: men in the lower half live one year longer. The article uses a pair of have and have-not counties 350 miles apart to dramatize the issue. Women’s life expectancy grew by five years since 1985 in the wealthy community: in the have-not county it fell by two years.
AngeloC replied [edited for length]: “this article tells us your quality of life across a variety of categories including life expectancy is worse if you are poor. What the author does not comprehend are the circumstances and choices that cause people to become poor and keep them that way. If you are born out of wedlock, or grow up in a chaotic family situation, or use drugs, or drop out of high school, then your chances of being poor are quite high. Conversely, the poverty rate for families comprised of a married couple is miniscule, as is the case for those who have finished college. We’ve been “at war” with poverty for 50 years now, and we are currently spending one Trillion dollars annually to battle poverty. So if money alone is the answer, then how much more would we need to spend to make poverty go away? George Will makes some good points here.”
Will’s main points are: “Nearly 48 million people receive food stamps — this dependency is inimical to upward mobility”, “the government’s [near-zero interest rate] monetary policy breeds inequality” and “the federal government’s fiscal and regulatory policies discourage businesses from growing the economy with the mountain of money the Fed has created.”
JohnK responded [edited for length]: “regulatory policies have something to do with discouraging business expansion, but the primary cause for lack of business expansion is lack of an expanding market. As a result of off-shoring in search of cheap wages to reduce production costs, and increasing use of automation, jobs in the U.S. and therefore the wherewithal to purchase goods is rapidly diminishing. Food stamps and short-term subsidies help a bit by injecting some purchasing wherewithal into the economy, but at best, it’s a Band-Aid on a serious hemorrhage. The Fed is injecting money into the banks to increase borrowing to expand business, but again, why borrow to expand your business if your market is shrinking? The money is being injected where it isn’t used to expand the economy. The Fed is limited in what it can do.
“What might help is for the President and the Congress to set up a long-term, well-planned 20-30 year program to rebuild and expand our infrastructure. Our roads, railroads, bridges need re-building and ongoing maintenance. If we are to meet the electricity needs of a more dynamic economy and the millions of electric vehicles hitting the roads, we should be enhancing and expanding our electric grid. With the ever increasing costs of extracting fossil energy, we should be expanding our renewable energy sources and reducing fossil fuel use by providing a modern efficient railway system. Investing in rebuilding and enhancing our infrastructure over a long period of time will provide for a huge number of jobs in the construction, steel and cement manufacture, and ancillary industries and will give a boost to the whole economy as workers spend their wages on buying goods.
“Why a 20-30 year plan? This will give businesses the confidence to expand, knowing that federal spending on infrastructure enhancement will continue for a long time. The Fed can’t initiate this. Only the President and Congress can do it, but once the program is in place, the Treasury can issue bonds to pay for it and the Fed can buy them. That will pay for a useful enhancement of infrastructure that will support our economic needs for decades to come.”
The discussion continues. We all agree with the initial statement — this is important. Although at first we saw implications that appeared to be in conflict, signs emerged that we may reach agreement on the underlying issue. That means, if we get to that point, we could potentially also agree on an action program.
My proposed program would include revamping our electric grid to facilitate generation from renewable energy sources and make it less vulnerable to attack. We could spend dramatically less on our military if we were not dependent on Middle East oil.
While cutting our military spend I would, however, continue to fund the Defense Research Projects Agency (DARPA) sponsoring of revolutionary technologies. That is where transformational breakthroughs in power generation and storage technology are most likely to originate.
But the primary point of this post is it illustrates how politicians also have at times debated so as to govern well. They could work that way again.