Can We Have A Rational Discussion On Macro-Economic Policy?
Recently I (Jerry) shared an editorial by Nobel Prize winning economist Joseph Stiglitz on ‘progressive capitalism’ with several friends and colleagues who have a range of political perspectives. I am not particularly familiar with his work and did not share it as an endorsement of his specific views. I shared it because it invites us to consider that there are macro-economic policy discussions that we could explore beyond the current trend to the far ends of the economic spectrum. While I certainly lean to the progressive side of the middle, I think we all benefit from a good and creative exploration of economic policy possibilities between the polarized options.
On one side we have the extreme of virtually unfettered and unregulated markets. While this perspective has been around for some time, it is finding strong support in the current US administration. The Stiglitz article in the NY Times offered two examples of this. One of my colleagues challenged whether that was enough to lay criticism of unfettered markets, yet there are numerous examples of the consequences of this perspective:
- Financial malfeasance: Wells Fargo, Enron, Deutsche Bank, Lehman Brothers, BearSterns, WorldCom
- Consumer malfeasance: Purdue Pharma, HealthSouth, Hyundai
- Environmental malfeasance: BP Petroleum, Monsanto, 3M (PFASs), Volkswagen
From my perspective, we do need some form of regulatory protection. The overriding question is how much and by whom. We seem unable to have a rational discussion on much of this.
On the other side, we see a trend toward greater concentration of the marketplace under the umbrella of governments. Examples include education (No Child Left Behind or Common Core), health care (national), extensive subsidies for specific economic sectors (oil, agriculture, pharmaceuticals). This too carries risk. We could have over regulated markets that favor specific sectors or very high taxes that discourage innovation and creativity. I have seen this in France, where the general perspective among young entrepreneurs is to go to the US if you want to start a business and a perspective among business owners that all expanding a business does is increase tax brackets.
Popular amongst some democratic candidates for President is tuition debt forgiveness for all and/or free tuition for all. I have found myself labeled a grumpy old guy when I share my worldview here. Certainly, tuition is way too high and college debt is a drag on our economy. If we look at what has happened with tuition recently, a good example is my alma mater, the University of North Dakota.
Tuition at the University of North Dakota in 1977 was $525 which equals $2,079 in 2016 dollars and the actual tuition in 2016 was $8,137, an increase of 291%. It seems reasonable to pay actual inflation adjusted tuition and not the inflated tuition. It also seems reasonable, to me, to find a way to forgive student debt over the amount of inflation adjusted tuition. To me, this offers a middle ground where personal financial responsibility and sound national economic policy could meet. Others may disagree or offer a better approach.
My point is, we need a better, less polarized discussion about what a market-based economy could look like that encourages innovation, investment, financial reward and protects consumers, the environment and ethical businesses. Can we have that discussion?