There is the kernel of an idea in the latest editorial in the Washington Post but, unfortunately, the editors fail to root through the chaff provided by their own preconceived notions to find it:
Restoring opportunity requires growth, but new information suggests achieving it will be more challenging after the pandemic, too. The Congressional Budget Office’s latest long-term economic forecast, released Sept. 21, posits annual average output growth of just 1.6 percent a year over the next three decades. For comparison, average growth in the first decade of this century, which included the Great Recession, was 1.9 percent annually. The CBO attributes this to projected slower growth in two key variables, the size of the working-age population and output per worker. The pandemic is expected to deliver a double demographic shock as both the birth and immigration rates fall, and it will take years to return to previous trends, if at all.
The silver lining is that there is no necessary contradiction between policies to spur growth and policies to share the fruits more equitably. Education and training, for example, enable individuals to earn more, even as they promote overall productivity. Resources to invest in them can come from higher taxes on top earners. As travel restrictions end — along with the Trump administration and its crude anti-immigration mind-set, we hope — the United States should increase immigration and reorient more of it toward fulfilling unmet labor-force needs.
Like American democracy, American capitalism has, on balance, been a force for human progress in the past. But, like our political system, the economy needs reform and modernization to thrive in the future.
I agree with the premises: our economy needs reform and modernization. I disagree with the few suggestions the editors provide (education and immigration). Let’s consider a few things.
Education and training could improve productivity but, unfortunately, governments are chronically incapable of providing that. Look at the history of job training programs in the U. S. The reason is simple: they are inevitably strongly predisposed to look backwards, preparing people for jobs that do not or will not exist. Additional subsidies of our educational system have the same problem. Just to provide one example every year America’s colleges and universities graduate more journalism majors than there are people working in journalism. Rather obviously, that is vanity training not job training. If you want to train people for the jobs of the future, you will need to rely more strongly on companies to provide it but companies no longer provide education or training as they once did. Early in my career my employers would pay the full freight for my going back to school part-time. Why did that stop? The answer is outsourcing. Today companies hire to suit. They send out to an Accenture, Tata, Infosys, or Wipro which will provide them a stack of resumes of people with exactly the education and training they require. That they are unable to evaluate or validate the resumes is rarely considered or that there are cultural issues underpinning productivity as well as credentials.
Consolidation is another problem. Companies have cultures which is to say they have self-imposed blinders. Today’s major companies are bigger than ever before and there are fewer of them. Being acquired by a major company is frequently the business plan for start-ups and there are fewer start-ups today than in the past.
Our economy has become far too reliant on minimum age, low wage, or sub-minimum wage employees. That is a consequence of our immigration system. Massive illegal immigration has resulted in a huge supply of such workers. So has sponsorship and our family reunification policies.
Resilience and redundancy are two of the reforms our economy needs but no company will ever invest in such things. Too much effect on the bottom line. There are two ways we could produce resilience and redundancy: a lot more companies competing with each other or specific government regulations requiring such things.
The ideological battle between anarcho-capitalist and progressives results in our economy being less dynamic, have lower productivity and lower wages, be less resilient, and less redundant than might otherwise be the case. Anarcho-capitalists imagine that individuals and businesses will produce those themselves if merely given the freedom to do so. Progressives imagine that politicians and governments are much more competent and honest than they actually are. They’re both wrong.