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Grant County Herald
Web site last updated:
February 1, 2012
Debt fiction vs. social wealth
What we really need, as Nobel Prize-winning economists Paul Krugman and Joseph Stiglitz point out in recent columns, is to get over the current obsession with debt reduction and instead focus on investing in our material and human infrastructure.
This requires the exact opposite of what is happening in Washington. Our most important national asset is our social wealth: the high-quality human capital essential for both individual and national success as we shift from a manufacturing to a knowledge and service economy. In economic terms, this translates into reversing the downward trend of U.S. international competitiveness. In human terms, it translates into ending enormous suffering.
Regarding our debt, consider, as Krugman points out in his New Year’s Day column in The New York Times, that it’s actually lower now than during WWII. Consider also that interest rates have not increased with big deficits. Indeed, they are at historic lows. Moreover, regarding the argument that foreigners who invest in the U.S. are reaping big profits, Krugman also notes that “America actually earns more from its assets abroad than it pays to foreign investors.”
However -- and this takes us straight to the critical need to re-examine our national priorities -- U.S. corporations with foreign subsidiaries, from General Electric to Nike and General Motors, are not America. U.S. companies may be reaping big profits by investing in other nations, but by so doing they are creating jobs overseas and not for Americans. In short, these are not the kinds of investments that will economically benefit people like you and me, or that will really benefit the American economy in the long term. What we actually need, and this is urgent given our decline in global competitiveness, is a massive national investment in the work of caring for people, starting in early childhood.
This wealthy nation is already behind other developed countries in the measurements that reflect the real wealth of America, not only international competitiveness, but basic measures such as child mortality and poverty rates, our standing in educational math and science rankings, and the state of people’s health and well-being. Unlike our gross domestic product (GDP), which is also rising along with Wall Street, these are the social wealth measures that we should be prioritizing.
As Joseph Stiglitz wrote in his recent Vanity Fair article, “The Book of Jobs,” instead of cutting health, education, and other such programs, we desperately need more public investments in education, research, and infrastructure.
A major step toward this change in national priorities is the development of more inclusive and accurate economic indicators than GDP -- social wealth indicators that assess the real state of our nation. We must show the general public and policymakers both the enormous “back-end” financial costs of failing to invest in people, such as more unemployment, poverty, crime, and despair, and the enormous social and economic benefits of investing in human capacity building so that our nation can weather the drastic technological changes afoot.
As Krugman states, “the fault lies not in our debt, but in ourselves.” It’s up to us to tell our elected officials that we demand public investments in our most essential national assets, our people. Let’s demand changes to the ways in which we measure economic success by demanding more inclusive and accurate indicators. And let’s make sure that corporations that are doing so well pay their fair share of taxes so we can invest in the real wealth of America: our people.
