Dear President-elect Obama,
I resume my optimistic suggestions regarding how all of us working together can transform America and the world with the topic
3. Government work.
Two basic questions need to be asked regarding jobs created by public funding:
(1) What kinds of work should the workers do?
(2) Where ought the money to pay them come from?
One might add a third question: (3) What institutional forms should be supported or assisted by public funding? Asking this third question suggests that institutions ought to be diverse and hybrid (public sector/private sector partnerships) rather than monolithic. I will defer discussion of this first question to another letter.
My (our) answers to the first two questions are:
(1) The workers paid from the public purse should do work that ought to be done, but which is normally not accomplished relying on the motivations that drive for-profit business and the people’s (self-employed) economy. The government should break the profit barrier to job creation. The government should break the market barrier to job creation.
For example, the biosphere ought to be preserved for the benefit of generations yet unborn. The unborn are not at this point customers with purchasing power in any market. Further, as Amory Lovins has remarked, the market quickly discounts the future value of natural resources to zero. I congratulate you for your plans to use public funds to green the economy. I add that evaluations of your programs should consider not just the green businesses that your green programs will generate, but also the long term consequences for the species and the planet.
For another example, it is easy to reach consensus (as in fact the city of Rosario did reach consensus through a highly participatory strategic planning process) that we want to live in an environment where music and the arts flourish. Yet when it comes to tearing ourselves away from our television sets to show up on Friday evening to pay money to listen to the local symphony orchestra, the amount of money collected is not enough for the musicians to live on. The people who derive economic benefit from financing the creation of a highly cultured environment are mostly the hotel and restaurant owners who cater to tourists and the owners of real estate, not the artists. Public funds ought to break the market barrier to improve quality of life for human beings, both by supporting people who have a passion to live creative lives in the arts and sciences; and by improving the moral, intellectual and esthetic atmosphere for everyone. Evaluators who do not know how to measure “atmospherics” should learn.
A third example and then I will stop although many more could be listed. Sports. The value of paying coaches and community youth organizers to run a basketball program for kids is not correctly measured just by what the kids or their parents will pay for it. It is also measured by health, by the growth of self-discipline, by social integration, by keeping kids off drugs, by crime prevention, and by the accomplishment (or failure to accomplish) of a series of goals not normally served by for-profit business or by the people’s economy.
Now let me add two conceptual nuances: The first is that job creation that breaks the profit barrier and the market barrier should be supported not only by public funding. It should also be supported by private funding. It should be supported by foundations and by large scale and small scale philanthropy.
The second conceptual nuance is that public sector performance in general should be measured by social efficiency, not by financial efficiency alone. I agree with Toye and Toye when they write in their intellectual history of the United Nations that the money spent by the OECD in the 1980s to fund studies designed to justify privatizing public sector enterprises could better have been spent studying how to improve the efficiency of the public sector, and how to measure its efficiency by appropriate criteria. Admirers of India’s economic miracle would do well to take note that after the reforms of 1991 poverty in India actually increased for a few years due to the unemployment generated by privatization, and when the gradual reduction of poverty in India resumed it was the resumption of a trend that began not with the 1991 reforms but in 1975 due to a new international division of labor which gave (and still gives) India a comparative advantage as a global supplier of low-priced high quality labor. Our (my but not only my) view is that public sector job creation should be counted as a plus, not as a minus. Providing employment is a benefit, not just a cost. If some workers of a public electric company are redundant in terms of the work that needs to be done to serve paying customers, instead of firing them and increasing unemployment management should consider putting them to work extending service to poor people in outlying areas, or putting them to work on alternative technologies whose benefits will accrue mainly to our children’s children.
(2) The money to pay for creating jobs paid for with public funds should come mainly from capturing the income generated (“rents”) by the sale of natural resources. It should come from public capture of unearned income, easing the burden on earned income.
In this respect North America has everything to learn from South America . The post-populist regimes of South America are learning how to capture rents from natural resources, and how to use the money to support the people’s economy and to support public sector social, health, and education programs.
The right-wing press and right-wing academics would have us believe that today’s regimes in Brazil , Venezuela , Ecuador , Bolivia , Paraguay , Argentina , Uruguay and perhaps Chile are just reruns of traditional Latin American populism. They are not. Traditional populist regimes ran up government deficits to fund their social programs. Unable to simultaneously to increase production and to raise wages, they followed inflationary monetary policies. In contrast, today’s post-populist regimes in South America are running budget surpluses. They have sound currencies. Contrast them with the United States with its astronomical government deficits, and with its beleaguered dollar.
Much of the secret of the nations that are today up-and-coming lies in the answer to the question, “Who owns the natural resources that are not the products of anybody’s labor, and not the products of anybody’s creative entrepreneurial skills, but are gifts of nature to the human species?”
Giving an ethical answer to this question provides one of the keys to putting money in the public purse, so that government can contribute its share toward reaching the goal of J.O.B.S. for all who seek and need employment.
Peace and all good,
December 1, 2008