Public Investment Needed for a Sound Economic Future |
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| Posted by Karen Traeger on Apr 23 2012 |
| Blog >> |
By: Bob Lucore
There is a long-standing difference between liberals, in the tradition of Americans for Democratic Action, and Conservatives regarding the role of government. In recent decades this difference has become more pronounced.
Conservatives today see little use for government, unless it can be used to benefit the corporate-rich. They tend to argue that if something is being done by government, it could probably be done better by the private sector. Their analysis has become strikingly unsophisticated. Government is bad, business is good. The rich create jobs, government makes waste. They pretend this is a principled position in favor of free-market ideals, but they have no objection to using the public coffers to provide subsidies to any number of industries such as big oil, military contractors or agribusiness giants.
This anti-government disease has so infected modern economic policy debates that many of today’s politicians seem to be blind to any possibility the government might have a key role to play in providing for a better future for all of us. They argue that we must shrink the size of government or we will be undermining the future economic health of the nation. They say we must shrink the deficit at all costs, even if it means depriving children and infants of proper nutrition, allowing infrastructure to crumble, failing to provide opportunities for good public education, or missing opportunities to develop the green technologies that are vital for our future.
Because ADA liberals do not have this knee-jerk compulsion to brand anything done by government as wasteful, we recognize that public investments can be even more important than private investment. We believe in a strong role for government in providing for potable water, clean power, conservation, job training, public schools, roads, bridges, airports, rail systems, and so forth. Unlike conservatives, we do not find the term “public investment” to be oxymoronic.
Josh Bivens of the Economic Policy Institute (EPI) has provided a great service to those engaging in this debate. His new study, Public Investment: The Next ‘New Thing’ for Powering Economic Growth, makes a careful, economically sound argument for a substantial government role in public investment. He reviews the current state of academic studies regarding public investment and argues that returns on public sector investments are higher than typical private sector investments. Investing by the government improves the productivity of the private sector. As he puts it:
Research on the impact of public investment continues to show large returns to private-sector productivity, GDP growth, and end even deficit reduction. But the proliferation of new, state-of-the-art research supporting this finding has been overlooked by policymakers. Were they aware, they would realize that calls to slash government spending that reduce public investment—in the name of reducing budget deficits that allegedly threaten the living standards of future generations—are deeply misguided.
Those who do not subscribe to the knee-jerk antigovernment view that is so prevalent in policy circles today, would do well to spend some time with this new study from EPI by Josh Bivens. Those who are persuaded by sensible economic arguments would do well to look here for guidance regarding the path to a better future.
Bob Lucore, a long-time ADA board member, is the former Director of Research and Policy for the United American Nurses and has worked for the Teamsters and the Department of Economic Research at the AFL-CIO. . He taught economics for several years at Centre College and Colorado State University and is currently a graduate student in the School of Library and Information Science at San José State University.
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